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W7iyJ3A4W ignores 
the Eurosceptics 

Pl *P»*n 9 *w Emu, Pago 2 

Japan’s economy 

Teetering imp. 
full rj6aession?y\ 


Stock markets 

The spectre 
of 1929 

Martin Walt, Page 14 

Today’s surveys 



Separate sections 


Croat suspects 
surrender to 
UN tribunal on 
war. crimes 

Ten Bosnian Croat war crimes 
suspects surrendered for trial to 
the United Nations tribunal in 
The Hague after intense US pres- 
sure an Fraujo Tudjman, the Cro- 
atian president, to comply with 
Dfytau peace process. The 10 
included Dario Kordic, one of the 
tribunal's most wanted suspects. 
Page 3 

Prustoer wins Nobel Prise 

Stanley Prnsiner, professor of 
biochemistry at the University of 
California, San Francisco, h n< ? 
won the Nobel Prize in medicine 
for his discovery of prions - the 
infections proteins that destroy 
the brains of people with Creutz- 
feldt-Jakob disease, cattle with 
BSE and sheep with scrapie. 
Pages ." 

Hamm leader released 

Sheikh Ahmed Yassin, the spiri- 
tual leader of Hamas, the IclaTiw 
resistance movement, returned 
to Gaza. Israel agreed to allow 
him back in exchange for two. 
Mossad agents arrested in Jordan 
for a botched assassination 
attempt cm another Hamas 
leader. Page 8 

IHbvuluR PM de nies rumours 

Mahathir Mohamad t Malaysia’s 
prime minister, dismfa«wd specu- 
lation that he may resign and 
criticised foreigners for allegedly 
trying to crust him by sowing dis- 
cord between Mm and his dep- 
uty, Anwar Ibrahim. Page 16 

Bitte r European pension dual 

Millions af Europeans working 
outside their native countries 
will benefit from improved pen- 
sion rights under proposals 
expected^ to receive the European 
Commission's support Page 2 

Kenya bam political party 

The Kenyan authorities have i 
refused to legalise a political ’ 
party, co-founded by Richard 
Leakey, the palaeontologist and 
wfldTife campaigner, raising 
doubts about the sincerity of the 
government’s recent commitment 
to electoral reform. Page 8 

3w*d°n to nil* out Emu entry 

The Swedish government will for- 
mally announce its decision not 
to join the European single cur- 
rency in 1998, dashing hopes it 
might foSow the UK in adopting 
a more positive approach to 
European econcanic and mone- 
tary union. Page 2; Lex, Page 16 

Aide speaks In funds probu 

Harold Ickes, President Clinton’s 
deputy chief of staff until earlier 
this year, will today give evi- 
dence to a Senate committee 
investigating alleged fund-raising 
abuses in last year’s presidential 
election campaign. Page 6; Edito- 
rial Comment, Page 15 

Turicoy unveils budget plans 

Turkey’s cabinet has unveiled a 
draft budget for next year setting 
out ambitious economic targets. 
But economists doubt the govern- 
ment will be able to attain many 
of its key aims. Page 2 

B e lgiu m to cut deficit 

The Belgian gove rnm ent wiH 
announce plans to cut the budget 
deficit to 23 per cent of gross 
domestic product next year - 
without raising taxes. Page 3 

Lebed wants on Mato 

Alexander Lebed, former Soviet 

candidate; has warned that Nato 
should not seek to expand into 
the Baltic states and Ukraine. 
Page 3 

Boris Jordan, the American 
financier who has played an 
important role in enticing foreign 
investors into Russia’s booming 
stock market, has had his visa 
stri pped from Mm for the second 
tirn« in little ova: a year. Page 2 



Club Med to 
exploit its 
brand name in 
new areas 

Club M£dfterran£e's strong brand 
name will be exploited to gener- 
ate new business when the 
French holiday village operator 
unveils its strategy early next 
year. Chairman Philippe Bour- 
guignon wants to develop ser- 
vices such as entertainment, 
sports and cafes to attract clients 
throughout the year, not just 
during annual holidays. Page 17 

Telecom Italia shares jumped in 
Milan as Italy's national operator 
began an investor roadshow. 
France Telecom shares, traded on 
a grey market ahead of flotation, 
also rose after the government 
fixed the issue price. Page 17 ; 
Observer, Page 15 

BAN privatisation: The French 
government indicated it was 
pushing back the sale of the 
state-owned insurance group and 
giving priority to privatising its 
CIC banking arm. Page 20 

CESP of SSo Paulo, which 
produces 17 per cent of Brazil's 
energy, is likely to be sold off as 
a single electricity business in a 
privatisation which could top 
SlObn. Page 17 

DuPont** acquisition of Imperial 
Chemical Industries' polyester 
and European titanium dioxide 
businesses won European Com- 
mission approval Page 19 

Akzo NoboL Dutch chemical 
group, is to put nearly half its 
fibres operations into a joint ven- 
ture with Turkish conglomerate 
Saband Page 20 

Daewoo, Korean Industrial 
group, starts producing its first 
new generation vehicle today at 
Poland’s FSO car plant Page 20 

Occidental Petroleum is set to 

treble its US oU reserves and dou- 
ble its gas holdings with an deal 
to pay $3.65bn for the federal gov- 
ernment stake in Elk Hills Field, 
California. Page 16 

Visa and Ma sterCard launched 
a New York pilot scheme where 
“smart cards" issued by both 
organisations can be used inter- 
changeably. Page 16; Smart card 
trick,Page 12; Observer, Page 15 

WoridCom, US company at the 
centre of world’s biggest takeover 
bid, appointed controversial 
Irish-born Liam Strong to head 
its international division. Mr 
Strong quit UK retail group Sears 
in May after criticism over losses. 
Page 18 

Sonya SoeurHfoa, troubled 
Japanese broker, is to receive 
Y9bn ($74m) of emergency help 
from three banks. Page 21 

India's Stack Exchange, hit by 

a communications satellite prob- 
lem, hopes to resume trading by 
Thursday by using an old satel- 
lite. Page 6; Editorial Comment, 
Page 15 

Shanghai's rod ostate market 

has fallen nearly 50 per cent in 
three years, with a new property 
index showing commercial down- 
town rents 48.9 per cent lower 
since the peak. Page 6 

Toyota, Japanese vehicle maker, 
boosted car and van output at its 
Vietnam plant »mid signs the 
country’s shrinking vahide mar- 
ket may squeeze out some car 
producers. Page 7 

Imfian Import curbs: The US 

has asked the World Trade 
Organisation to settle its dispute 
with Delhi over the phasing out 
of Indian import restrictions on 
2,700 consumer goods. Page 4 

Ntchtei, Japanese non-bank 
finance company, is selling at 
least $470m of shires to US and 
European investors in the biggest 
international offering by a Japa- 
nese company. Page 17 

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e THF. FINANCIAL TIMES L1M1TE D.1997 No_.33.415 

^ ^ 

Clinton warning to 
developing nations 
over climate change 

Ely Owen Robinson in Tokyo, 
Bruce Clark m Washington 
and Leyfa Boulton In London 

A call for developing as well as 
developed countries to play their 
part in tackling the problem of 
climate change was issued yester- 
day by US President Bill Clinton. 

At the same time, he acknowl- 
edged that it would be a “grave 
mistake" to ignore the dangers of 
global warming. 

His warning came shortly after 
Japan, which is preparing to host 
an international conference on 
the issue in December, made a 
suggestion for curbs on green- 
house gas emissions associated 
with global warming that was 
denounced as inadequate by the 
European Union. 

The Japanese proposal went 
further than anything the US is 
likely to accept It calls for green- 
house gas emissions - mostly 
carbon dioxide caused by fossil 
fuel burning - to be cut over the 
next 10 to 15 years to a level 5 per 
cent below that of 1990. 

President Clinton, who faces 
massive pressure from US busi- 
ness lobbies to avoid signing up 

to emission limits that they 
allege would harm the economy, 
insisted there was little doubt 
among scientists that such emis- 
sions posed a real danger. 

“I think we all have to agree 
that the potential for serious cli- 
mate disruption is real." be told a 
conference of scientists, business- 
men and policy-makers that was 
intended by the White House to 
lobby support for emission curbs. 

In a discussion chaired by Mr 
Clinton, leading scientists said 
that if no action was taken, tem- 
peratures could rise substantially 
in the next century, leading to 
floods, storms and droughts on a 
catastrophic scale. 

But the President, responding 
to US critics who say their coun- 
try will bear a disproportionate 
burden in efforts to head off cli- 
mate change, accepted their argu- 
ment that developing countries 
must play their full part 

"If current trends continue, 
emissions from the developing 
world will likely eclipse those 
from the developed world in the 
next few decades." he said. At the 
forthcoming conference in Kyoto, 
Japan, the US would “ask for 

Markets hopeful as 
Italian PM fights 
to save government 

By James Blitz In Rome 

Romano Prod i, the Italian prime 
minister, was last night battling 
to save his 17-month- 
old government from collapse, 
holding crucial talks on the 1998 
budget with the leaders of the 
country’s neo-Communist party. 

In Rome, Mr Prod! met Fausto 
Berlin otti, the leader of Recon- 
structed Communism (RC), on 
which the centre-left government 
relies for its parliamentary 
majority. Italian newspapers 
dubbed the negotiations the 
“moment of truth" for the Prodi 
adminis tration. 

There was speculation that 
both sides could be on the verge 
of doing a deal before a critical 
confidence- debate in parliament 

But Mr Bertlnottj's tone was 
strident. “It is clear that we are 
again saying No to this budget,” 
Mr BertLnotti said before entering 
Mr Prodi 's office in the Palazzo 
Chigl- Mr Bertinotti. a former 
trade union activist, has repeat- 
edly attacked budget plans to cut 
pensions and welfare spending 
next year by around L5.000bn 

Italian financial markets 
appeared confident that a deal to 
save Mr Prodi’s government 
could be arranged. Market senti- 
ment was dominated by a com- 
ment that the RC leader had 
made at the weekend 
suggesting that a “one-year pact" 
could be agreed with the govern- 

The comments restrained sell- 
ing on the Milan bourse where 
the Mibtel index was down 0.50 
per cent at the close of trading. 

But the lira weakened from 
L979.5 to L980.6 against the 
D-Mark as the uncertainty con- 

After nearly three hours of 
talks, senior members of Mr Pro- 
di’s office were still unsure 
whether a deal could be reached. 
“We simply did not know what 
line Mr Bertinotti would take 
when he came in to see us," said 
a spokesman for Mr Prodi. “We 
need to prepare ourselves for any 

RC is putting forward a range 
of ideas for inclusion in the bud- 
get, alongside its demands for 
restraint on pensions cuts. These 
include implementation of a 35- 

hour week for employees by the 
year 2000 and the conversion of 
Iri, the state holding company, 
into a job creation agency that 
could increase the workforce by 
several hundred thousand in 
forthcoming years. 

However, Tiziano Treu, the 
labour minister, said the govern- j 
ment would not give way to Ideas 
that smacked of “Soviet-style eco- 
nomics”. A spokesman for the 
prime minister said the govern- 
ment was prepared to consider a 
range of ideas being put forward 
by RC, but that it would accept 
“nothing which creates the 
impression that we have moved 
away from our fundamental 
European goals". 

The participants in last night's 
talks were working under a tight 
deadline, because the govern- 
ment is facing a critical confi- 
dence debate today as a result of 
RC's threat to withdraw support 

Currencies, Page 25 
World stocks. Page 36 

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• fiannany, fte bad boy of Enrape 
Page 14 

• GSbert & Gouge In Pots 
Arts, Page 13 

• Cuba: who wBJ succeed Castro? 
American News, Page 5 

• The defence of Europe 
Editorial, Page 15 


• Converting heat into electricity 

Technotogy, Rage 12 

• India’s sateffita troubles 
Editorial Page 15 


• Nor Oppenheoner heads De Beers 
International Company News, Page 19 

• Why Mownpick went far Schbpfer 

international People, Page 11 

Persy Sarr^erifik 

thalnr.Hn 552 airf 

| aHfaflH’ 

'Building a multinational 
cadre ^ International 
managers is the key* 

'Tc.i Srse in 

FT : 

• US campaign financing 
Editorial Page 15 

• MCJ and US telecoms 
lex, Page 16 


• mdoeestans rash far doOars 
World Stock Markets, Page 36 

• MgbGghts at a glance 
Global equities, Page 35 

me aning ful but equitable com- 
mitments from all nations". 

US organisations opposed to 
any early action on climate 
change kept up their pressure 
yesterday, taking three full pages 
of advertising in the Washington 
Past to drive home their claim 
that the treaty being proposed in 
Kyoto “doesn’t make sense for 
America - or the world". 

The sharply contrasting posi- 
tions laid out yesterday in Wash- 
ington, Tokyo and Brussels made 
it virtually certain that Decem- 
ber's Kyoto conference would 
turn into a tough diplomatic bat- 
tle - both within the industria- 
lised world and between devel- 
oped and developing nations.. 

The meeting’s formal purpose 
is to consider curbs on green- 
house emissions among the 
industrialised countries. How- 
ever, Mr Clinton indicated the US 
would not sign up to anything 
without a clear assurance that 
developing states would also be 

Japanese officials described the ; 
EU's long-standing proposal, | 

Continued on Page 16 I 

Senator Carol Moseley-Braun and William Brodsky, chairman and 
CEO of the Chicago Board of Options Exchange, applaud the 
exchange's launch of options trading based on Dow Jones industrial, 
transportation and utility averages yesterday pum mum 

Worms investors launch friendly 
takeover to block Pinault bid 

By Andrew Jack in Paris 

The leading investors in Worms, 
the French conglomerate, yester- 
day announced a complex 
FFr32bn ($5.38bn) friendly take- 
over for the group in an attempt 
to block a FFrSObn hostile bid 
launched last month by Francois 
Pinault, the financier. 

Under the terms of the deal, 
which include a mixture or cash, 
shares and other financial 
instruments, Someal, a company 
owned by Italy's Agnelli family, 
plans to raise its stake in Worms 
from 20 per cent to 100 per cent 

AGF, the French insurance 
group, which owns 7 per cent of 
Worms, would take a stake in 
Someal and also acquire Athena, 
Worms’ insurance subsidiary, for 
FFruZbn. Some 13 per cent of the 

shares would also exchange their 
stake in Worms for a participa- 
tion In Someal before a public 
offer on the remaining quoted 

Antoine Jeancourt-Galignani, 
AGF chairman, said: “This is a 
clear, attractive offer. It is a 
response to the bid by Francois 
Pinault, which was inadequate 
in both the amount and the 
method of payment." 

Nicholas Clive Worms, head erf 
Worms, said: “This deal will give 
ns continuity rather than break- 
ing np the group. It will separate 
a dynamic insurance group and 
allow the rest of the company to 
foDow its traditional role as a 
medium-term investor in indus- 
trial activities. It ensures the 
capital gains are not confiscated. 
The Pinault offer would have left 

investors with less than the real 
value of their shares." 

Investors will be offered 
FFr1,820, two AGF shares and 
one certificate to underwrite the 
value of the AGF share in 
exchange for every five Worms 
shares they hold. They will 
receive FFr669 for each Worms 
convertible bond. 

Worms said the offer was 
equivalent to FFr465 a share at 
the closing AGF price on Friday 
of FFr238.40 compared with 
FFr410 under the takeover pro- 
posal launched last month by Mr 
Pinault through Artemis, bis 
holding company. 

After the offer, AGF would 

Continued on Page 16 
Lex, Page 16 
France hints at delay. Page 20 

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Den norske stats oljeselskap a.s 

Rasmussengruppen AS 

have formed a major maritime and 
offshore services company 


NatWest Markets Corporate Advisory Limited 

acted as adviser to 


NatWest Markets 

, ||trn|1 l,--. i.m 2,3 Technology 12 Arts 13 Letters 14 Companies 18-23 Currencies 25 Bonds 24 Wortd Equities 32-36 

1 ... .. 


Prosecution seeks six-year jail terms for Herri Batasuna leaders accused of helping Eta J NE ws digest 

Basque separatists use 
bias claim to delay trial 

By Tom Bums In Madrid 

The trial of the entire 
national committee of Herri 
Batasuna, the political wing 
of the Basque terrorist group 
Eta, was briefly suspended 
yesterday minutes before the 
hearing was due to start 

As police outside the 
Supreme Court In Madrid 
baton-charged rightwing 
demonstrators demanding 
the death penalty for Eta 
gunmen, the three trial 
judges retired to consider 
objections lodged by defiance 

Among the complaints 
were that one judge was too 
biased to deliver a fair rul- 
ing. and that all three were 
subjected to pressures from 
a government determined to 
put the defendants behind 
bars. The legal ploy turned 

‘will stay 
on target’ 

By Ralph Atkins in Bonn 

Pufafebed bv Tbe Financial Times (Europe) 
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Deputy Chtunnna. The rbarcholda- of the 
Financial Tunes (Europe] GmbH is Pear- 
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Shareholder of this company is Pearson 
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O Tbe Financial Times Limited 1997. 
Editor Rkfaud Lambert, cfo The Fmandal 
Times Limited, Number One Soolbwaih 
Bridge. London SEI 9HL 

out to be only a momentary 
setback for the government’s 
prosecutors, who have 
brought Herri Batasuna’s 23- 
member collective leader- 
ship to corut. Within two 
hours, a hastily convened 
meeting of 17 supreme court 
judges rejected the objec- 
tions, saying they were “a 
self-evident abuse of the 
legal process”. 

In what Herri Batasuna 
has characterised as a politi- 
cal show trial, the prosecu- 
tion Is seeking six-year jail 
terms for all 23 an charg es of 
collaborating with Eta. The 
hearing, viewed as a water- 
shed case in Spain's han- 
dling of Basque terrorism, 
was rescheduled to start 
next Monday. 

The chief evidence against 
the Herri Batasuna leaders 
is that they attempted to 

show a video featuring 
masked members of Eta in 
television broadcasts during 
last year's general election 
campaign. They are also 
accused of issuing state- 
ments after Eta assassina- 
tions that were construed as 
encouraging more terrorist 
attacks. Politicians in Mad- 
rid have in the past treated 
Herri Batasuna with toler- 
ance, in part because of the 
size of its electoral support 
and because it was believed 
that a conciliatory approach 
could woo radicals back into 
mainstream p olitics . 

This policy appears to 
have changed under the cen- 
tre-right Popular party gov- 
ernment, but it has been 
criticised by spokesmen for 
the Basque Nationalist 
party, the majority party in 
the area, who believe that a 

crackdown on Herri Bata- 
suna will further polarise 
local politics. 

Public sentiment is 
broadly in favour of action 
against Herri Batasuna. On 
the grassy verges of a boule- 
vard close to the court, rela- 
tives of those killed by Eta 
planted more than 800 
wooden crosses, each bear- 
ing the name of a victim of 

Herri Batasuna’s electoral 
backing has slipped in 
recent yearn, but it was the 
third hugest party in elec- 
tions to tbe Basque parlia- 
ment in 1994. It returned two 
members to the Madrid par- 
liament in last year’s general 
elections, when it obtained 
181,000 votes and gained 18 
per cent of the total vote in 
its stronghold, the province 
of Guipuzcoa. 

Brussels to back better pension deal 

By VBcbael Smith ki Brussels 

Tbe risk of rising German 
inflation is played down in a 
report today by the Munich- 
based Ifo economic institute. 
Ifo predicts price increases 
will r emain wi thin the Bund- 
esbank’s target range of 1-5-2 
per cent this year - and 
probably in 1998. 

The institute predicts an 
average inflation rate for 
1997 of 1.75 per cent For 
next year, it sees only slight 
additional price pressures - 
assuming no substantial 
devaluation of the D-Mark 
and that the next pay round 
does not lead to highs* unit 
labour costs. The institute's 
report suggests recent 
D-Mark weakness has had 
only limited upward effect 
on overall consumer prices. 

Separately, economic min- 
istry figures for new manu- 
facturing orders in August 
showed the extent to which 
exports continue to power 
the German economy. 

A 7.1 per cent increase in 
foreign orders, compared 
with the previous month, 
more than compensated for a 
1.9 per cent drop in domestic 
orders. Overall orders were 
up 1.7 per cent Unemploy- 
ment figures today are : 
expected to underline the 1 
high level of joblessness 
curbing consumer spending. 

Despite an unemployment 
rate approaching 12 per cent 
of the workforce, German 
trade union leaders last 
weekend demanded an end 
to wage restraint adding to 
fears about price pressures. 
The opposition Social Demo- 
cratic party has also lent 
support to calls for an "end 
to moderation”, arguing 
higher wages could boost the 
economy through increasing 
domestic demand. 

Oskar Lafontaine, SPD 
leader, said yesterday: 
“Holding back wages can be 
sensible, but It can’t be a 
permanent state of affairs”. 

But there was also pres- 
sure from within the union 
movement not to risk fur- 
ther jobs losses. Hubertus 
Schmoldt, leader of the min- 
ing, chemicals and energy 
union, said wage negotia- 
tions had to be bandied 

Friedrich Bohl, minister in 
the Bonn chancellor's 
department, said an "end to 
moderation” threatened “an 
end to reasonableness by 
unions" . 

Millions of Europeans working 
outside their native countries will 
benefit from improved pension 
rights under proposals expected to 
receive the European Commission's 
support tomorrow. 

The Commission is likely to adopt 
a directive which, would help pre- 
serve the pension entitlements of 
European Union citizens when they 
move jobs to another EU country. 
The measures fall short of eliminat- 
ing all the obstacles associated with 
occupational pensions. Commission- 
ers believe the steps will ease free 
movement of people in the EU. 

If the directive is approved by 

member-states, a worker moving 
abroad would be guaranteed his or 
her acquired rights in a pension 

People who left an occupational 
pension scheme to work abroad 
would not lose the rights already 
acquired in the scheme which they 
would have preserved had they 
changed employers in the same 

The directive would also guaran- 
tee that workers posted temporarily 
by their employer from one country 
to another could continue to make 
contributions to an occupational 
pension scheme in the first country. 

In terms of tax. the host state 
would have to treat these contribu- 

tions in the same way as it treats 
contributions made to occupational 
schemes in its own territory. This is 
important because favourable tax 
treatment can make a significant dif- 
ference to the final pension received. 

The main beneficiaries of the tem- 
porary worker changes would be 
employees in multinational compa- 
nies who are often put off going 
abroad to work because of pension 

Each year, more than 500,000 EU 
citizens are employed abroad by 
their companies. The p re se rvation of 
acquired rights would benefit signifi- 
cantly more workers, since at any 
one • rime more than 3m EU citizens 
work in member-states of which 

they are not nationals. 

The C ommissi on’s likely adoption 
of the pensions directive follows its 
rejection last year of more radical 
proposals by Padraig Flynn, social 
affairs commissioner, and opposed 
by countries including Germany. 
These sought to tackle the problem 
of so-called “vesting periods”, the 
time people must work for a com- 
pany before qualifying for benefits. 

Germany has a vesting period of 
10 years for most company pension 
schemes, and employees who leave 
before then are penalised. The sys- 
tem acts as a disincentive to move- 
ment, within and outside the coun- 
try. Mr Flynn is keen for action for 
progres s on occupations] pensions. 

BMW accelerates towards Tur Hf y 

n . unveils 

target tor monetary umon ambitions 

The German carmaker’s accounting chief tells Peter Norman targets 
he sees the euro as a ‘historic opportunity’ for EU economies By John Barham in Ankara 

^ -BMW has its 
in. Munich, 
centre of Ger- 
111311 scepti- 
cism about 
the euro. 
Through its 
Pinnarlna Rover subsid- 
TJPSl?® iary it also 

tor Emu has a huge 

stake in 
Britain, which has an opt- 
out from the European sin- 
gle currency. But neither its 
location nor its investment 
has deterred the Bavarian 
luxury carmaker from 
enthusiastic support for eco- 
nomic and monetary union 
and from drawing up plans 
for the single currency in 
the growing belief that 
Britain will be linked to tbe 
euro by 2000. 

For Wolfgang Stofer, the 
head of treasury, accounting 
and taxes who is responsible 
for BMW’s adaptation to the 
euro, the single currency is a 
“historic opportunity” which 
should serve as “a booster” 
to the German and European 

“I can see no disadvan- 
tages from the euro,” be told 
the Financial Times. 

BMW began preparing for 
the euro in 1996 and would 
be in a position to switch its 
operations from tbe D-Mark 
in 1999, the target date for 
Emu. Adoption of the single 
currency will be a step-by- 
step affair, however, if only 
because the German public 
administration will not 
abandon the D-Mark for the 
euro until 3002. 

The company expects to 
seek shareholder approval at 
its next annual meeting in 
spring for powers to put Its 
capital on a euro basis, most 
probably by converting its 

DM50 nominal shares into 
securities with no par value. 
It has yet to decide whether 
to convert its balance sheet 
from D-Marks to euros in 
1999, although Mr Stofer 
says he “could imagine" 
such a switch. 

BMW founded a project 
team of just three people to 
manage the switch to the 
euro, after first analysing 
the problems and then work- 
ing out a timetable for Emu. 
Overall, up to 300 people will 
be involved in tackhng the 

“Europe is facing a his- 
toric choice between keeping 
up with global competition 
or felling back economically 
into small scale national- 
ism,” Mr Stofer says. 

“Our view is that the euro 
is the tool by which we win 
make a global player out of 
the middle-sized nations 
such as Germany, France, 
the UK and the other Euro- 
pean countries, to be able to 
compete with the US or in 
the future with far east Asia. 

“For us the euro is so 

Hie company expects to ' 
seek shareholder approval 
at its next amiaal Hieetmg 
: in spring for powers to put 
its capital on a euro basis : 

conversion, but some will 
spend only a few hours or 
days on the project 

Because BMW's top man- 
agement took a decision in 
favour of the euro, there is 
no scope for internal debate 
about whether or not to 
move ahead with prepara- 
tions. The project trio can 
cut through hierarchies. “We 
have a *to do’ list and no one 
can stand in the way,” one 
manager explains. 

BMW is combining its 
switch to the euro with the 
adoption of a new standard 
software and measures to 
tackle the year 2000 com- 
puter problem. This makes it 
hard to estimate the overall 
cost of conversion. Mr Stofer 
puts it at around DM40m 
($23m), a modest amount for 
a group with annual sales of 

important, because 25 per 
cent of world trade win be 
invoiced in euros, with a 
good chance that it will grow 
to 35 or 40 per cent It will be 
the number two behind the 

The euro will bring greater 
stability through its growing 
importance as a global cur- 
rency and. unlike the 
D-Mark, is not expected to 
overshoot in value. “We 
don't expect to have such 
large fluctuations between 
the euro and the dollar as 
between the D-Mark and the 
dollar, because the blocks 
win be bigger.” 

The single currency will 
also have a direct impact in 
reducing the share of BMW's 
turnover, subject to cur- 
rency risk. At present 64 per 
cent of worldwide sales are 
at risk from currency fluctu- 

ations. The share of sales at 
risk from European currency 
movements will shrink with 
the euro to 10 per emit from 
26 per cent 

Mr Stofer expects econo- 
mies of scale and more secu- 
rity For investment that 
should benefit small and 
medium companies in Ger- 
many as well as large 

“We have a lot of medium- 
sized multinationals with 
around 10,000 employees in 
Germany. One in two Ger- 
man medium-sized compa- 
nies sells about 70 per cent 
of its products in Europe - 
in ‘euro land’. 

They have a huge opportu- 
nity because they have 
already gone through the 
process of shedding labour 
and introducing lean man- 

But will the euro be such 
good news for Rover? 

Problems would arise if 
sterling were to become 
established at the equivalent 
of the August exchange rate 
of DM3 to the pound. This 
would necessitate structural 
changes at Rover to ensure 
its profitability and would 
create a big unemployment 
problem In Britain by 2000. 

Mr Stofer believes flight 
capital will flow back to Ger- 
many from Britain alter the 
switch to the euro has been 
digested, and that this 
should push sterling down to 
a more sustainable level 

But his advice to Britain is 
still to join the euro. He 
believes UK membership 
will come after a period of 
association, and that sterling 
will be linked to the euro “in 
some way or other” by 2000. 
Lex, Page 16 ; Germany - 
the bad boy of Europe, 

Page 14 

Sweden rules out euro entry 

By Tim Burt In Stockholm 

The Swedish government will this 
week formally announce its decision 
not to join the European single cur- 
rency in 1999, dashing hopes it might 
follow the UK in adopting a more posi- 
tive approach to European economic 
and monetary union. 

Erik As brink, the country’s finance 
minister, will tell parliament on Fri- 
day that public scepticism and fears of 
a soft euro mean it would not be in 
Sweden's Interest to become a founder 
member of the currency. 

Presenting a parliamentary bill out- 
lining Sweden's approach to Em a, Mr 
Asbrink will reiterate the position of 
the ruling Social Democratic party, 
which in June described prospects for 
the euro as “very uncertain". 

In an Interview with the Financial 
Times, Mr Asbrink said the large num- 
ber of EU member states hoping to join 
from the outset would mean the single 
currency would be ."slightly softer 
than we expected. 

“Sweden is best served by a strong 
euro that implies countries meet strict 
demands when it comes to conver- 
gence criteria,” he added. “If there 
was only a smaller group in the enro 
from the start, it would reduce the risk 
of a weaker currency.” Nevertheless, 
he said the Social Democrats, who face 
a general election next year, would 
keep the door open for later participa- 
tion in the single currency. 

They had begun making practical 
preparations for the introduction of 
the euro, including allowing Swedish 
companies to list their stocks in the 

single currency rather than Swedish 
krona. In spite of the government’s 
cool approach to Emu, Sweden is 
likely to be one of the first countries to 
meet the convergence criteria for join- 
ing the single currency. The govern- 
ment is predicting a balanced budget 
for 1998 and inflation of no more thaw 
2 per cent. 

In recent weeks, several leading 
Swedish economists have predicted 
that the Social Democrats may signal 
their readiness to join Emn after 
reports that the UK government is 
warming to the project. 

Mr Asbrink, however, said the Swed- 
ish government had not yet detected 
any significant change in UK policy. 
“We are influenced by British behav- 
iour, but that does not mean we will 
copy what the UK does,” he added. 

Turkey’s cabinet has 
unveiled a draft budget for 
next year setting out ambi- 
tions economic targets that 
yesterday powered financial 
markets to a new high- But 
economists doubt the gov- 
ernment will be able to 
attain many of its key aims. 

Officials say the budget 
will be the cornerstone of a 
three-year “medium-term 
stability programme" . to 
deliver sustainable growth 
and low inflation by the turn 
of the century. 

The budget, which Mesut 
Yilmaz, the prime minister, 
is to present to parliament 
next week, aims to lower 
inflation to 50 per cent by 
the end of next year from 90 
Iter cent now. It would hold 
spending at $57.8hn and the 
budget deficit at $l5.6bn. 
Growth would halve to 3 per 
cent from a forecast 6 per 
cent this year. 

Miranda X a fa. economist 
at Salomon Brothers, the 
New York investment b ank, 
said: “1 do not see much of 
an improvement over this 
year. 1 do not see this gov- 
ernment making significant 

The budget allowed gov- 
ernment spending and the 
budget deficit to rise in line 
with inflation, she added. 
Last year's budget deficit 
was equal to almost 10 per 
cent of gross domestic prod- 

Turkish governments 
often miss their budget tar- 
gets by wide margins. The 
government of Necmettin 
Erbakan, Turkey’s first 
Islamist leader, presented a 
balanced budget for 1997. 
But Mr Yilmaz. who took 
over In June, claimed this 
year’s budget deficit would 
actually rise 15 per emit to' 

Mr Yilmaz has he will 
not impose belt-tightening 
measures, since he is expec- 
ted to call early elections 
before the end of next year. 
He has rejected plans by his 
ministers to introduce a new 
dollar-linked currency as 
part of an anti-inflation plan. 

Analysts say it is not clear 
how he proposes to lower 
inflation without tighter con- 
trol on public finances, the 
mainspring of Turkey's infla- 
tion. Mr Yilmaz has 
increased taxes and sold 
same assets, but has not cut 

Financial markets rallied 
yesterday an the expectation 
that Inflation would subside 
to 70 par cent next year. 
Share prices rose 3.5 per 
cent; yields on government 
securities fell nearly one- 
fifth to 100 per cent 

Jon Igadoras, leader of Herri Batasuna (right), enters court 
yesterday with party member Carlos Rodriguez ap 

CAP reform warning 

Fanners would lose between Ecu5.5bn ($6-lhn) and. 
Ecu65bn ($7.2hn) in revenue a year as a res ult ’Of .. 
European Commission plans to reform the Common 
Agricultural Policy, according to Copa, their . 
representative organisation- 
in a detailed response to the reforms, Copa says the - •• 
proposed changes would put at risk the suxvrvaTof many 
producers and, in some cases, whole sectors of 
agriculture. . .: 

Although the Commission estimates that spending cm 
tbe CAP would Increase by EcU4bn, Copa points out that : 
fhtg is in 1997 prices and does not allow for inflation. • 
Capa’s analysis says that proposed direct payments would 
not compensate fully for cuts In support prices In the •• 

cereals, beef and milk sectors. . 

Cereals farmers would incur a deficit of Ecu2.2hn a year 
when the reforms, are folly in place in 2006. Beef fanners.-; 
would suffer a loss of up to ExmSLSbn, whflemllh" 
producers would be Ecu450m out of pocket . 

Copa also criticises the Commission for foiling to bring; 
forward proposals for other sectors, including wine and* - 
alive oil, that are of importance to the European Union’s 
southern regions. ' Michael Smith, ’ Brussels 


Oil rig strike averted 

The Norwegian government has averted a threatened 
shutdown of ofl. production from the country's floating - 
offshore rigs by persuading the striking Federation of Oil 
Unions (OFS) and the Norwegian Shipowners Association 
to accept binding arbitration overa longruxming pay 

The shipowners association, representing companies _ . 
operating 20 floating rigs In the Norwegian, sector of the 
North Sea, had Umwtenad a lockout of all OFS member# , 
from tomorrow If the onion did not abandon industrial' 
action which has halted production on five rigs. . 

Yesterday, however, the shipowners withdrew the ' 
threat after the union suspended its six-week strike ~ 
pending the start of government-backed arbitration. 

■ The dispute centres on the OFS*s refusal to accept a 73 
per cent pay increase for its members unless it includes 
fixed rates for additional work. Two other unions r ' 
representing offshore employees have already accepted 
the offer. .■■■-'■ ?. ' 

The rig owners have lost an estimated NKr45m ($6.4m) 
in chartering rates since the dispute began. It is reported 
to have cost StataU, the govemment-owned oil producer, - 
NKrlfen a day in lost production. Tim Burt, Stockholm 


American barred again 

Baris Jordan, the American financier who has played an- 
important role in enticing foreign investors into Russia's 
booming stock market, has had bis visa stripped from Mm 
for the second time in little over a year. • 

Border guards retained Mr Jordan’s multiple-entry visa 
for “technical reasons” when he left Moscow at the end of 
last week, leaving him unable to return to Russia. A3 
chief executive of MFR-Renaissanoe, Moscow’s biggest 
investment bank, Mr Jordan played a crucial rblerin ^ 
marshalling foreign financial s up port-far Obexhnbank’s 
successful bid for a 25 per cent share in Svyazinvest, the 
telecommumcatiaus holding company. • 

That auction sparked contr o versy with rival Russian 
banks and led to a vicious press campaign against 
Oneximbank officials. Mr Jordan remains mLondon 7 . •“ 
while applying far a new visa. John TharnhSL, Moscow 


Parties ‘lack entry policies’ 

All Poland’s political parties want to take the country 
into ihe European Union but most lade detailed policies 
on how to achieve it, a political think-tank said yesterday. 

“C onsi dering the period we are in, several months V. 

before membership talks start with the EU... it Is 
surprising how shallow parties' programmes are on this 
issue,” said Lena K olarska-Bobinska, head of the Public .-*• 
Affairs Institute (ISP). 

Most parties preach vaguely pro-European aTnganc 
rather than detailing their attitudes to the EU*s common 
agricultural policy or monetary integration, Ms ' 
Kolareka-Bobinska, presenting a report cm pniraga i .- 
parties and their approach to EU accession. 1 VI 

Poland hopes to begin membership negotiations eariy ' 
next year and join some time after the year 2000. -?• ^ - 

The talks will probably be conducted by a new • 

government of the right-leaning Solidarity El ect ion - * 
Action and the smaller centrist Freedom Union, which are 
negotiating with each other after beating a <»ft aittion'qf ’ 
ex-communists and tbe Peasant Party in last month’s . ^ 
elections. -. -- . . Reuters. Warsaw 


Vichy veteran on trial 

Dozens of potential jurors appeared yesterday at the 
heavily guarded Palace of Justice in Bordeaux, where - - : . 
Maurice Papon goes on trial this week for ccanidictty In' 7 

Crimes npiwrf h irmimit y. . • 

Mr Papon, 87 t a former Vichy police supervisor; is the 1 
highest-ranking official of the pro-Nazi regime to face 
those charges. He allegedly signed, arrest orders 'that led 
to the deportation of 1,690 Jews from Bordeaux: ’ > 

The trial, expected to last three montiis, will give v' : 
France an opportunity to examine once more its wartime 
collaboration with Nazi Germany,-- . . ■-■ - 

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Election rule thwarts Serb nationalists 

By Guy Dhunora in Belgrade 

Serbia's ultra-nationalist 
Radical party leader. Voiis- 
Jv Seselj, narrowly 
□ef eating the candidate of 
the ruling Socialists in Sun- 
day’s presidential election, 
accord ing to partial results 
yesterday that indicated a 
low turnout would invali- 
date the result, 

Tfoe -Republican Electoral 
Coopiisston put the turnout 
at 49A per cept, based on 
returns from 65 per cent of 
polling^ stations, if 
results) show a turnout of 
less than 50 per cent, fresh 
presidential elections must 
be held. . 

Mr Seselj, a farmer para- 
military leader during the 
wars in Croatia and Bosnia, 
was winning just under 50 
per cant, of votes cast The 
Socialist candidate, Zoran 
Lilic, had 47 per cent The 
re maining ballot papers 
were spoiled. 

H Our Radical avalanche 
has swept Serbia,” Mr Seselj 
proclaimed in triumph. 

The outcome was ano ther 
blow to Slobodan Milosevic, 

the president, of federal 
Yugoslavia (Serbia and Mon- 
tenegro), whose Socialist 
coahtiou lost its majority in 
Serbia's parliament in elec- 
tions last month because of 
Radical gains. 

Mr Seselj, who implacably 
opposes the US-inspired Day- 
ton peace accord in Bosnia, 
described Sunday’s election 
as a “tragi -comedy". He 
accused the Socialists of 
stuffing ballot boxes with 
votes from e thni c Alb anians , 
then desperately removing 
them when they saw Mr 
Lille stOl could not . win and 
they needed a low turnout to 
invalidate the result 

The independent Centre 
for Free Elections and 
Democracy said its monitors 
had seen Socialist officials 
carrying full ballot boxes 
into a polling station in the 
Albanian-populated village 
of Ribnlk. It also confirmed 
Mr Seselj' s accusations that 
police had Intimidated 
people into voting for Mr 

Analysts ascribed the low 
turnout in the second round 
run-off to disillusionment. 

among voters presented with 
a stark choice between the 
extreme right and the heirs 
to the communists who have 
ruled Serbia since the Sec- 
ond World War. 

Belgrade's ousted opposi- 
tion mayor, Zoran QjindJic, 
who led a campaign to boy- 
cott the polls, announced 
that he would contest the 
new elections. Western gov- 
ernments, alarmed at a pos- 
sible Radical victory, hope 
the fragmented opposition 
will unite around a more 
centrist candidate. 

"Seselj is a fascist and we 
couldn't work with him,” 
Robert Gelbard, the US spe- 
cial envoy to tbe Balkans, 
told reporters. 

Serbia’s constitution is 
vague about a timetable for 
new polls. The republic 
could be left without a presi- 
dent for several months, giv- 
ing Mr Milosevic time to 
reinvigorate his fragmented 
coalition and possibly cut 
deals with other opposition 

Mr Seselj said the Radicals 
were still willing to discuss 
forming a parliamentary 

coalition with other parties, 
incl uding the Socialists. The 
Radicals hold S2 seats in the 
250-seat assembly while the 
Socialist allian ce has 110. 
The pro-monarchy Serbian 
Renewal Movement has 45 

Mr Milosevic, Serbia’s 
strongman for the past 10 
years, was barred by the 
constitution from r unnin g 
for a third term as president 
He orchestrated his appoint- 
ment to the federal presi- 
dency in July, but his posi- 
tion could be threatened by 
the outcome of Sunday's 
presidential elections in 

Partial results yesterday 
showed Momir Bui a to vie. 
the current president and a 
close ally of Mr Milosevic, 
was narrowly ahead of the 
reformist, Milo Djukanovic. 

A second round run-off is 
likely to be held between the 
top two candidates on Octo- 
ber 19. Analysts expect a vic- 
tory for Mr Djukanovic, who 
is determined to prevent Mr 
Milosevic from strengthen- 
ing his powers at the federal 

Belgium to 
avoid further 
tax increase 

Seselji celebrates with a ‘Greater Serbia' cake 

Croats surrender to war crimes tribunal 

By Guy Qinmore 

Ten Bosnian Croat war 
crimes suspects yesterday 
surrendered themselves for 
trial to the United Nations 
tribunal in The Hague after 
Intense. US pressure on 
Franjo Tudjman, the Cro- 
atian president, to comply 
with the Dayton peace pro- 

The 10 Indicted Croats 
included Dario Kordic, one 
of the tribunal's most 
wanted suspects, who is 

accused of a leading role in 
the massacre of more thaw 
100 Moslems in the central 
Bosnian village of Ahmid In 
1993. Mr Kordic had. previ- 
ously enjoyed official protec- 
tion in the Croatian capital, 
Zagreb, but was given up by 
Mr Tudjman after US assur- 
ances last week that the 10 
would not have to wait for 
more than five months 
before going on trial. 

Washington this year 
blocked two World Bank 
and International Monetary 

Fund loans to Croatia and 
threatened It with diplo- 
matic isolation if Mr liidj- 
man did not comply with 
the 1995 Dayton peace 
accord, which demands the 
surrender of all war crimes 
suspects. Only one Croatian 
war crimes suspect. Ivies 
Rajic. now remains at large. 

Mr Kordic told friends and 
relatives at Split airport, in 
southern Croatia, that he 
would prove his innocence 
and return. 

A former journalist who 

Moscow drawn Lebed 
into dispute ™ 

over oilfield exnans 

By Arkady Ostrovsky . 
and Robert Corzfne 

The, -straggle over- control -of 
Russia's single biggest oil- 
field found to date intensi- 
fied yesterday as the govern- 
ment was alleged to have 
taken sides in the dispute. 

A director of Nizhnevar- 
tovskneftegas (NNG). a 
Siberian production com- 
pany. accused Alfa group, a 
banking-industrial consor- 
tium, of using political con- 
nections in order to gain 
control over the oil produc- 
tion company. Alfa denied 
the allegations and said the 
conflict was. one between a 
Soviet era director of the 
NNG and private investors. 

The dispute comes ■ ahead 
of the sale of the remaining 
state holding in Tyumen Oil, 
a holding company whose 
main asset is NNG. Tyumen 
Oil is controlled by Alfa 
while its subsidiary comes 
under a group of Russian 
companies which include 
foreign investors. 

Mikhail Nekrich, a mem- 
ber of the NNG board, yes- 
terday produced a .letter 
from Boris Nemtsov, a first 
deputy prime minister and 
leading reformer, which pur- 
ports to give Alfa effective 
control over NNG exports. 

This is the latest in a 
series of accusations to tbe 
effect that the government 
favours certain financiaT in- 
dustrial groups. The dispute 
follows controversy over 
recent sales of the state- 
owned Svyazinvest, the Rus- 
sian telecoms group, and 
Norilsk NIckeL a metal pro- 

Politics now appears to be 

playing a prominent part in 
the struggle for control of 
NNG. “It is the battle 
■ between dejvre amt da facto 
control over a «wnpany. and 
Alfa is using its political 
connections with Nemtsov to 
obstruct our business;” Mr 
Nekrich said. He said the 
investors he represents 
spent seven years buflding 
up a 48 per cent stake, only 
to find AKa refusing to give 
them a say comparable to 
their shareholding. - " 

Mikhail Fridman, head of 
Alfa group, yesterday cate- 
gorically denied tbe charges, 
saying his company had 
secured a majority stake in 
NNG and has the right to 
control it. In an interview, 
Mr Fridman said it was a 
case of a daughter company. 
NNG, refusing to carry out 
the 1 decision - of the mother 
company, Alfa. 

He said NNG was in a par 
Ions financial state, and 
accused senior executives of 
miCTTuin flgBn |Mit He said Mr 
Nemtsov’s letter gave Alfa 
legitimate power to control 
proceeds from the exports, 
which amount to 400,000 
tonnes a month. 

Mr Fridman said NNG 
was, in effect, controlled by 
Transworld, a controversial 
international trading com- 
pany which deals in Russian 
metals. Mr Nekrich. how- 
ever, denied having any con- 
nections with Transworld. 

Mr Fridman said Alfa’s 
move to control NNG was 
not aimed against minority 
shareholders. "We respect 
shareholders’ rights but we 
wfil not allow the company 
to be run like a loose can- 
non," he said. 

on Nato 

By Charles Clover in Berlin 

Alexander Lebed, the former 
Soviet general and Russian 
presidential candidate, has 
warned that Nato should not 
seek to expand into the- Bair 
tic states and Ukraine. 

Addressing a conference in 
Berlin, he said Nato's plans 
to incorporate the Czech 
Republic, Hungary and 
Poland by 1999 were not a 
threat to Russia, because the 
entry of these three coun- 
tries represented the "legal 
formalisation of the histori- 
cally developed community 
of western civilisation. 

"Everything changes, how- 
ever, if there are attempts to 
include the Baltic States and 
Ukraine,” he said, reflecting 
a recent mood shift among 
top Russian foreign policy- 
makers towards staking out 
tbe former Soviet Union as a 
zone of "geopolitical influ- 

Despite his agreement 
with the broad notion of 
Russian foreign policy, he 
had harsh words for Russia’s 1 
foreign policy-makers. In an | 
interview with the Financial 
Times, he said: "Our politi- 
cians have no concept of 
national security, no mill- , 
tary doctrine, no overall doc- 
uments for security. 

"So we have a situation 
where the defence ministry 
and tbe foreign ministry 
have the task of formulating 
policy on a purely hypotheti- 
cal leveL . . so for example, 
in the Caspian Sea, you have 
Lukoil making policy ” he 
said, referring to the giant 
Russian oil company which 
has staked claims in the Cas- 
pian oilfields. 

$33bn debt accord will 
ease Russian borrowing 

By John ThonrfriB 
in Moscow 

The ability of Russian 
borrowers to tap interna- 
tional capital markets was 
boosted yesterday when the 
' country agreed a restructur- 
ing. of $3Sbn of commercial 
bank debts .run up by the 
former Soviet Union. • 

Hie long-awaited . agree- 
ment with the London Chib, 
which follows Russia's 
admission to the Paris Club 
of creditor nations last 
month, should strengthen 
the country's reputation 
among foreign creditors and 
enable domestic borrowers 
to raise money on more 
favourable terms. 

Anatoly Chubais, -first dep- 
uty prime minister, hailed 
the agreement as a mile* 

% .JL 

stone in Russia’s re-integra- 
tion into the world economy. 
“It is especially important 
for the authority and reputa- 
tion of the country, which is 
no less valuable than its 
gold reserves," he said. 

The Russian government 
has already made three euro- 
bond issues and has been 
quickly followed by several 
municipal authorities and 
commercial banks. Some of 
Russia’s most progressive 
companies have also lapped 
international capital mar- 
kets, with the Tatneft oil 
c ompany and the Mosenergo 
energy company launching 
eurobonds last week. 

The complex 25-year debt 
deal, which has been under 
negotiation since the Soviet 
Union fell apart in 1991, 
involved more than 400 

became a senior figure in Mr 
Tndj man’s Croatian Demo- 
cratic Union, Mr Kordic was 
the Croat commander in 
central Bosnia during the 
1993 war with Moslem 
forces. UN peacekeepers led 
by a British colonel. Bob 
Stewart, uncovered 104 
corpses of Moslems killed by 
Croat militia in Ahmici on 
April 22, 1993. Many had 
been shot and thrown into 
the burning ruins of their 

A senior western diplomat 

said the surrender of the 10 
Croats would increase pres- 
sure on wanted Serb sus- 
pects such as Radovan 
Karadzic, the ex-Bosnian 
Serb president, and General 
Ratko Mladic, to turn them- 
selves in. 

"They live in fear that 
someone will snatch them. 
They will be handed over 
sooner or later,” the diplo- 
mat said. 

Robert Gelbard, the US 
special envoy to the Bal- 
kans, watched the 10 Croats 

leave Split and then flew to 
Belgrade to pat pressure on 
Slobodan Milosevic, the 
Yugoslav president, who 
still wields authority over 
his former Bosnian Serb 
wartime allies. 

"Overall co-operation with 
the tribunal by the parties 
until today has been disap- 
pointing,” Mr Gelbard said. 

The US was now looking 
forward to closer co-opera- 
tion with Croatia. "Now the 
glaring exception is Bel- 
grade and Pale,” he said. 

BY Nefl Buckley in Brussels 

The Belgian government will 
today announce plans to cut 
the budget deficit to 23 per 
cent of gross domestic prod- 
uct next year - without rais- 
ing taxes. 

Jean-Luc Dehaene, prime 
minister, will also use his 
annual state of the nation 
address to propose the 
merger at federal level of 
two of Belgium's three police 
forces: tbe gendarmerie, or 
general face, and the judi- 
cial police, or criminal inves- 
tigations unit. 

The third network of 
municipal police forces 
would remain independent 

Merging the forces has 
been demanded by cam- 
paigners for legal reforms 
and by a special Investiga- 
tion into last year's paedo- 
phile murder case involving 
four young girls. 

The projected 2.3 per cent 
deficit - down from a fore- 
cast 2.8 per cent this year - 
is well below the European 
Union's 3 per cent require- 
ment for members of the 
pl ann ed single currency, 
now almost certain to 
include Belgium. 

To achieve it without fur- 
ther tax increases would pro- 
vide some respite for Bel- 
gians, who have endured 
years of austerity pro- 
grammes involving public 
spending cuts and a three- 
year wage freeze as Belgium 
has sought to get its 
finances in order. 

The country still shoulders 
one of the highest debt lev- 

els in the EU at 127 per cent 
of GDP, the legacy of fiscal 

laxity in the 1970s and 1980s. 
Servicing that debt pushes 
Belgium from what would be 
a healthy budget surplus 
into deficit. 

Before interest charges, 
the surplus of revenues over 
spending - or primary sur- 
plus - is now 5.3 per cent of 
GDP. big enough to allow 
Belgium to pay off chunks of 

The central pillar of the 
plan drawn up by Philippe 
Maystadt, finance minister, 
for the next three years is to 
maintain the same primary 

That should allow increas- 
ing debt repayments, leading 
to lower interest charges and 
a smaller final deficit, with- 
out tax rises. 

Assuming economic 
growth of 2.5 per cent next 
year - lower than most inde- 
pendent forecasts - federal 
spending should fall from 
38.3 per cent of GDP to 37 £ 
per cent Revenues should 
fell from 43.5 to 43 per cent. 

Pressure will remain on 
spending in many areas, but 
social security will get a L.5 
per cent increase. The jus- 
tice ministry will get an 
extra BFr3J2bn <$88m), or B 
per cent, to fund legal 

The government will also 
reduce Belgium's crippling 
social security burden on 
employers by BFr6bn from 
next July - equivalent to 
BFrl2bn annually - in an 
effort to stimulate job cre- 

jv V f 

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banks and 30,000 loan agree- 
ments. Russia, which took 
on the Soviet Union's entire 
foreign debt, will start repay- 
ing some overdue interest 
payments next month, but 
the bulk of tbe interest and 
principal repayments will 
follow from 2002. 

Bank of America, which 
acted as the restructuring 
agent for the deal, wifi be 
responsible for supervising 
the trading of the restruc- 
tured debt and registering 
transfers of ownership. 

The London Club deal is 
likely to clear the way for 
more foreign investment in % 
Russia. Several big western 
banks, such as Deutsche 
Bank, refrained from com- 
mitting themselves while 
Russia was in default of its 
commercial debt obligations. 

can trace our limea 
software engineer 

Graham Annis left college with an ND in Software 
Engineering and 1 5 distinctions. Today, his work faces an 
even tougher examination. As a trainee software engineer at 
GEC-Marconi Avionics in Rochester, Graham is part of die 
team writing rest software for the Primary Flight Computer 
on board the next Boeing 777. The 777 represents the stare 
of the arr in jetliner reliability, and Graham is just one of the 

many talented people who’ve made it happen. Boeing has 
been working with European experts and their companies 
for 30 years. For one simple reason: we want to work with 
people who are best at what they do. Of course, building an 
airplane is a massive enterprise. It takes teamwork on a grand 
scale. Many individuals, many companies, many countries. 
But working together, we can do almost anything. 



.7 1997 


EU lowers temperature with US over Iran 

By Lionel Barber 
in Luxembourg 

European Union foreign 
ministeis yesterday avoided 
rhetoric and criticism in the 
transatlantic dispute over 
US threats to punish foreign 
companies which invest in 
Iran. Sir Leon Brittan, EU 
trade commissioner, won 
support for his efforts to 
defuse the dispute over the 

Helms-Burton anti-Cuba law 
and the Iran-Libya Sanctions 

The move followed signals 
from Washington that the 
administration intends to 
hold off on sanctions against 
Total, the French oil com- 
pany. which has signed a 
$2bn contract to develop a 
natural gas field with Iran. 

Sir Leon called for a “sig- 
nificant advance*' in the 

US-EU negotiations to pre- 
vent the Europeans re-open- 
ing their formal complaint in 
the World Trade Organisa- 
tion against the Hetms- 
Burton legislation. A six- 
month truce over the Helms- 
Burton act expires on Octo- 
ber 16, bnt Sir Leon insisted 
that this was “not an abso- 
lute deadline". 

Talks are to resume In 
Brussels on October 14-15. 

Sir Leon wants a deal to 
exempt European companies 
from the scope of the legisla- 
tion and would settle the 
issue of expropriated prop- 
erty. The US believes Euro- 
pean companies investing in 
Cuba risk dealing in assets 
confiscated from Cubans res- 
ident in the US. 

The best chance of a com- 
promise lies In a stronger EU 
commitment to increase 

pressure on Iran to curb ter- 
rorism and arms prolifera- 
tion. The EU supported these 
goals, but would never agree 
to the US dictating European 
commercial policy toward 
Iran, Sir Leon said- Pierre 
Moscovici, French European 
affair s minis ter, agreed: 
“American law is for Ameri- 
can companies." 

Separately, EU foreign 
ministers finally ended a bit- 

ter internal row over rice 
imports from the Dutch 
Antilles. The dispute was 
TwMiw g up the disbursement 
of EU aid to poor countries 
in Africa, the Caribbean and 
the Pacific and former Euro- 
pean colonies. 

Bice exports from the 
Dutch Antilles, principally 
Curacao, have soared to 
around 200.000 tonnes a year. 
Companies imported rice 

and sugar from British Guy- 
ana and Surinam and re- 
exported ft, tariff-free, to the 
EU - to the irritation of 
Ttainn, S panish, and Portu- 
guese growers. 

The compromise cap6 the 
level of rice Imports from all 
overseas and dependent ter- 
ritories at 160,000 . tonnes, a 
year. This release® long-; 
awaited EU aid to poor coun- 



By Jerentf Grant in Hanoi 

UK to offer 
Russia £500m 

export credits 

By Guy de Jonqulbres 

Britain is to make available 
a further £500m (SSiOm) in 
export credits to Russia and 
expand the Export Credits 
Guarantee Department's 
capacity to insure Russian 
investments by UK compa- 

The decision was 
announced by Tony Blair. 
UK prime minister, during a 
visit to Moscow yesterday. 
He said they reflected 
Britain’s increased confi- 
dence in Russia's economic 
achievements and prospects. 

The new credits are for 
British capital goods exports 
and follow increases of 
$800m in April 1993 and 
$250m last December, which 
are almost exhausted. They 
bring the ECGD’s total expo- 
sure to Russia to almost 
£2bn, among the highest lev- 
els for any country covered 
by the department. 

Until now. all ECGD-sup- 
ported contracts have been 
guaranteed by the Russian 
government. But the depart- 
ment said yesterday ft was 
keen also to encourage busi- 
ness which was not backed 
by sovereign guarantees. 

The ECGD said it had 
advanced its regular annual 
review of Russia because of 
Mr Blair's visit It had con- 
cluded that the Russian 
economy was in better shape 
than for several years, but 
that ft was still a risky mar - 

Mr Blair is expected to dis- 
cuss investment prospects 
for Britain's largest compa- 
nies during his visit. British 
Petroleum is believed to be 
in negotiation with. Sidanco, 
a major Russian private-sec- 
tor player, to launch a joint 
bid for Rosneft, Russia's last 
big state-owned oil company. 

John Browne, BP chief 
executive, was last week 
reported to have asked the 
prime minis ter to seek assur- 
ances that the tender pro- 
cess would be open and com- 
petitive and that the proper 
legal and fiscal guarantees 
would be in place. 

UK investment in Russia 
has accelerated rapidly, post- | 
ing a three-fold rise over the 
past year. UK exports broke i 
through the $lbn mark in 
1996 and the UK is among 
the half dozen most impor- 
tant suppliers to the Russian 

Mr Blair said he also 
hoped Russia would be able 
to join the World Trade 
Organisation next year. 
However, trade diplomats 
said they believed negotia- 
tions would take longer than 
that to complete. 

Talks on Russia's WTO 
application are still at a 
fairly early stage: They have 
been complicated by 
Moscow's apparent reluc- 
tance to commit itself not to 
increase trade barriers - a 
pre-condition for member- 

Yeltsin meets Blair, Page 9 

Daley urges China 
to open its markets 

By John Ridding 
in Hong Kong 

William Daley in Hong Kong yesterday: China must accept 
obligations as well as opportunities of open trade rbuw 

China most move faster in 
op ening its markets to gain 
entry to the World Trade 
Organisation, William Daley, 
US Commerce Secretary, 
said yesterday before hold- 
ing talks in Beijing. 

“For trade to continue to 
thrive, China must be will- 
ing to accept the obligations 
as well as the opportunities 
that open trade brings,” the 
commerce secretary said. 
“The pursuit of internal 
reform and economic dyna- 
mism has preceded decisions 
to open the economy to 
international competition." 

Mr Daley, who today- 
meets Wu Yi. China's minis- 
ter for foreign trade and eco- 
nomic co-operation, said 
t alks between the US and 
China had not made ade- 
quate progress. However, he 
was hopeful about specific 
issues relating to specific 

projects or c ompan ies. 

“I am optimistic that there 
will be same movement on a 
number of matters. Many erf 
these have been in the pipe- 
line for quite a long time,” 
said Mr Daley. “With the 
trade numbers being what 
they are. I think it would be 
very helpful to this relation- 
ship that some of these mat- 
ters be acted on." 

The US recorded a trade 
deficit with China of $39 ^bn 
in 1996, although Beijing dis- 
putes the way the US mea- 
sures the trade imbalance. 
But Mr Daley saidr “The real 
message of these numbers is 
that the Chinese market baa. 
yet to open". V 

Trade relations have 
moved to the top of the bilat- 
eral agenda in advance of 
President Jiang Zemin’s visit 
to the US later this month 
and amid China's push for 
WTO membership. China 
yesterday began two weeks 
of talks in Geneva with its 

main trading partners in the 
hope of mflkfog progress in 
‘ its WTO appUcatian- 

China has criticised -the 
US for making “unreason- 
able demands" concerning 
its WTO membership and 
has demanded Washington 
p THte the anrinal debate over 
China’s . most favoured 
nation trading, status. 

' Ms Wu said at the week- 
end the annual- MFN review 
had created: a; feeling of 
instability among the busi- 
ness communities of the two 
countries and had not been 
conducive to trade develop- 
. ment Officials 'said yester- 
day ft was' unclear whether 
Beijing's - call for permanent 
. MFN status would be on the 
summit agenda when Presi- 
dent Jiang visits the US. 

Mr Daley said yesterday 
the US wanted to pursue 
China’s entry into the WTO 
but in a way that generates 
commitment to the princi- 
ples of the WTO. 

US calls in WTO over India import row 

By Mark Nicholson 
in New Delhi 

The US has formally 
requested the World Trade 
Organisation to convene a 
disputes panel to settle its 
disagreement with Delhi 
over the pace at which India 
is prepared to phase out 50- 
year-old restrictions on the 
import of 2,700 consumer 
goods, WTO officials con- 
finned yesterday. 

The US placed the issue on 
the agenda for the next 
meeting of the Geneva-based 
trade organisation's disputes 
settlement body on October 

Creation of a panel, the 
binding final arbiter of trade 
disputes among WTO mem- 
bers. would bring to a head a 
long-standing row between 
India and its main trade 
partners over its restrictions 
on consumer goods imports. 

A ruling against India could 
force it wholly to open its 
markets within two years. 

However. WTO rules per- 
mit India to c laim a further 
period of talks before a panel 
is formally convened - a 
likely move, which would 
require the US to resubmit 
its request for a panel at the 
disputes committee’s next 
meeting in November. 

Without agreement at that 
point, however, a panel 

would have to be formed, 
and would be expected to 
report within six months. 

The US, along with several 
of India’s other trading part- 
ners Including the EU. Can- 
ada. Australia and New Zea- 
land, have rejected an Indian 
proposal to phase out its 
curbs on consumer goods 
imports over six years. 

The trade partners bave 
also objected to the proposed 
“loading” of India’s time- 

table. which they argue 
leaves too many important 
consumer i tems to last 
So for the US is alone in 
formally seeking a WTO 
panpl but EU officials said 
they and other of Indian 
trade partners would be 
likely to follow the US 
should India not modify its 
proposals. Indian and EU 
officials said yesterday that 
talks to resolve the issue 
were continuing. 

Toyota, the Japanese vehicle ' 
maker, yesterday- boobted- 
production of cars arid vans 
at Its Vietnam plant amid : 
signs the country's shrink- 
ing vehicle market vrmay 
squeeze out some 'ear pro- ■ 

Fierce competition : 
between foreign joint yen- " 
ture assembly plants; poor^ 
infrastructure, sagging pur-. 
ch asin g power and competi- - 
tion * from second -hand , 
imports has prompted for-, 
eign car manufacturers to 
scale, down production, . 
sometimes drastically. 

Of the 14 foreign compa- 
nies li cens ed to build assem- : 
bly plants, nine. are;. opera- 
tional Analysts -say this is 
too many for a market that _ 
will take longer than expec- . 
ted to mature. 

Sales of locally-produced 
vehicles last year were 5,500, 
with this yearis-figure expec- 
ted to be lower due to slow- 
ing economic growth. 

Toyota said it would raise 
production of Corolla sedans 
and Hiace vans to almost 300 
vehicles a month, from 5Q 
since temporary production 
began a year ago. 

The push for market share 
has prompted price wars and 
a slowdown in production. , 
BMW, which assembles its 
sedans under licence, said - 
fourth-quarter sales would 
be about 20 units, compared . , 
to 70 in the same period a . 
year ago. ; ‘ v . ' 

Purchasing power in the 
co mmunis t-mcr country is 
still low,- with average 
annual per capita income at 
about $300. 

Companies face extra pres- 
sure from stockpiles of sec- 
ond-hand imports. Under 
tough “localisation" rules, 
foreign joint ventures must 
ensure 30 per cent local con- 
tent after 10 years. 

Analysts - say Toyota and 
other large manufacturers 
plan to weather poor market 
conditions unto . conditions . 
improve and a shakeout has 
occurred. • 

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Top aide to speak on US funds scandal 

By Gerard Baker 
in Washington 

offlcw at the 
WMteH onse will today give long. 

awaited mdrace to a ^ 

J3““ investigating alleged ftmd- 
abuses in last year's prea- 
ofintiai deetiuu campaign 
Harold kies. President Clinton's 
dgmty chief of staff until earlier 
tans yew and a central figure in 
^Iskig funds for the president's re- 

election campaign, will give his 
testimony to the Senate govern- 
mental. affairs committee. He is 
expected to deny any illegal or 
knproper activity took place. But 
he will do so against a background 
of new accusations Mr Clinton 
used the White House to raise cam- 
paign ftmdB in violation of the law. 

The administration released vid- 
eotapes at the weekend of meetings 
held between Mr Clinton and 
important donors to the Demo- 

cratic party, leading Republicans 
claim the tapes prove Mr Clinton 
held what were in effect fund- 
raisers on the grounds of the presi- 
dential mansion, in defiance of the 
law. Administration officials say 
the tapes show merely that Mr 
Clinton thanked people for taking 
part In one tape, a leading Demo- 
cratic party official apparently 
refused five cheques offered by a 
guest and said the donations amid 
be handled later. 

But Republicans also claimed the 
very belated release of the tapes as 
evidence suggesting Mr Clinton 
and his officials were covering up. 
The Justice department has been 
probing alleged fundraising abuses 
since the start of the year, and the 
Senate governmental affairs com- 
mittee requested it be given all 
available evidence in June, but the 
White House only handed over the 
tapes on Friday. The explanation 
given was that officials had 

forgotten about their existence. 

“We didn't even know about 
them, and that really bothers us,” 
said Dan Burton, chairman of 
House of representatives commit- 
tee that begins its own inquiry 
tomorrow. The late appearance of 
the tapes will also encourage 
Republicans to press Janet Reno, 
attorney general, to appoint an 
independent prosecutor to investi- 
gate the case. 

Editorial Comment, Page 15 

Cuba’s Communist party congress leaves leadership issue off the agenda 

Castro eyes the new kids on the block 

hen Cuba’s ruling 

Communist party 
holds Its Fifth 
Party Congress this week in 
Havai i, one issue that may 
be abient from the formal 
agendi is the question of a 
sncces or to 71-year-old Pres- 
ident-1 (del Castro. 

Nevertheless, Interest in 
the i s ne has been sharp- 
ened br a growing percep- 
tion t tat Mr Castro is 
tncreastigly feeling his age 
and ms r not be in the best 
of heal h. This will focus 
attentic i during the October 
8-10 cat p-ese on election of a 
new p&ttraro to lead the 
ruling' ferty and the nation 
into th? next century. 

An immediate change in 
Mr Castro's dominant posi- 
tion isunltkely. But observ- 
ers wU be watching far the 
appetuance of new faces or 
the ccosolidation of existing 
figure In the potttbnro who 
might assume the leadership 
when the president dies or if 
his opacities are reduced by 
ill hetith. 

Thf party meeting, held to 
oolncde with the 80th amd- 
. versay of the death in 
BolrUa of the Argentinian- 
Cubm guerrilla hero 
Emsto “Che” Guevara, is 
expeted to produce few sur- 
prise an the policy front 

Apolitical document to be 
adopted by the congress 
assa-ts one-party socialism 
is tuba's only “patriotic" 
opton in the face of 
increased hostility from the 
“senlar enemy”, the US. 
“Tie nation will contin- 
ue... to be socialist," it 
detailed.' • 

The Congress should be 

The image of Che Guevara, Argentinian-Cuban guerrilla hero, forms a backdrop to Cuban president Fidel Castro (left). 
Clock wise from top left: Ricardo Alarcdn, Na tional Assembly president; Carlos Lage, vice-president; Roberto Robalna, 
foreign minister and Radi Castro, the president’s brother, who is defence minister and number two in the Cuban hierarchy 

seen as a reaffirmation of 
the political line of the Revo- 
lution,” said Carlos Lage, 
Cuba’s vice-president. 

This leaves little room for 
abrupt change in economic 
policy. An economic report 
to the meeting is expected to 
endorse a continuing cau- 
tious strategy of economic 
modernisation and limited 
market-oriented reforms, 
enough to stimulate eco- 
nomic recovery but not to 
threaten political stability. 

The document Is likely to 
stress the need for improved 
economic efficiency and 

repeat Cuba's commitment 
to seek foreign capital, tech- 
nology and markets where 
necessary. It will advocate 
creation of small and medi- 
um-sized enterprises but 
within the context of state 
ownership. Privatisation is 
nn t on the agenda. 

The future leadership 
issue remains the most 
Intriguing. Mr Castro. 
Cuba's “Comandante en 
Jefe" who combines the tri- 
ple roles of head of state, 
government and trip parly, 
has commanded the commu- 
nist-ruled island's fortunes 

with no serious rivals for 
more than three decades 
since the 1959 revolution. 

But now the veteran 
leader is old and apparently 
ailing - At public appearances 
over the last three months, 
Mr Castro seems to have lost 
some of his customary 
robust energy. Some foreign 
ambassadors who met him 
recently said he looked thin 
and unwell. His once packed 
work schedule seems to have 
been cut back. 

The president's health, 
like all aspects of his per- 
sonal life, is a well-guarded 

state secret. Government 
spokesmen have insisted be 
is “in excellent health". 

Nevertheless, he appears 
increasingly to delegate 
some tasks and responsibili- 
ties to other figures, not only 
to his brother, RaOl Castro, 
the 66-year-old defence min- 
ister and number two in the 
Cuban hierarchy, but also to 
younger officials. 

For example, Mr Lage, 
who trill be 46 this month, 
has emerged as the 
day-to-day manager of 
Cuba’s economic reform pro- 
cess. Some already see him 

as a de facto prime minister. 

Observers will be watch- 
ing to see whether other key 
figures in the economic 
reforms, such as Jos£ Luis 
Rodriguez, the economy min- 
ister or Francisco Soberon, 
the central bank president, 
will be elevated to the 
cupola of the party, perhaps 
at the expense of ageing 
“old-guard" hardliners. 

Some analysts think that 
after so many year of virtual 
“one-man rule" by Mr Cas- 
tro. a collective leadership 
may emerge from the exist- 
ing party elite when the vet- 
eran leader dies or steps 

Mr Castro’s brother, Radi, 
is not seen as possessing the 
same nationally unifying 
personal charisma. 

Besides RaCl, among those 
viewed as posable members 
of a future leadership group 
are Ricardo Atarcfin, 60, the 
president of Cuba's National 
Assembly, and Roberto 
Robaina, 41, Cuba's youthful, 
feisty foreign minis ter. 

Observers expect to see a 
continuing presence of the 
military, the “uniformed 
party", in the new palitburo 
and any future collective 

Mr Castro has made clear 
he expects those who suc- 
ceed him to continue his leg- 
acy. In a speech last montii 
he told his “Imperialist” ene- 
mies to abandon their hopes 
that the Cuban Revolution 
would die with him 

“Others will come," he 
said. “Inspired by the work 
of the Revolution." 

Pascal Fletcher 

news digest 

telecoms fear 

A move by Argentina’s most powerful telecoms and media 
groups to enter the race for a contentious auction of 
mobile telephone licences has raised monopoly fears. 

Two new companies have joined the race for the two 
Personal Communications Systems (PCS) digital bands up 
for auction in the Greater Buenos Airies region. According 
to industry sources, Argentine cable company Supercanal 
Holding and a company representing Citicorp Equity 
Investment, the Argentine private equity branch of US 
bank Citibank, purchased tender specifications on Friday. 

The PCS concession, considered a cheaper but 
better-quality form of mobile telephony than cellular 
phones, is expected to generate |500m in annual sales. 

Cltionp Equity Investment is already a 30 per Cent 
owner of Telefonica Argentina, one of two monopoly 
telephone operators in Argentina. On Thursday, CEI and 
its partner in Telefonica Argentina. Spain’s Telefonica 
International, announced the joint purchase of 66 per cent 
of Argentina's third largest cable company, Cablevision 
TO, for 6500m. Andrea Mandel-Campbell, Buenos Aires 


Clinton uses line-item veto 

President Bill Clinton last night wielded his line-item veto 
pen for the second time, exercising an important new 
power which could give him increased clout in the 
Republican-dominated Congress. 

The president used the veto to scrap 38 projects worth 
$287m from a military construction appropriations bill, 
saying: “Government must continue to live within its 
means.” Although the items be attacked were only a 
percentage of the 59bn measure, the action could have a 
strong impact in Congress. Nancy Dunne . Washington 


Canadian ambassador quits 

Canada said yesterday its ambassador to Mexico had quit 
because of a press interview in which he scoffed at 
Mexico's anti-drug efforts and complained of widespread 
corruption. Ambassador Marc Perron tendered bis 
resignation and will return to Ottawa, Lloyd Axworthy. 
foreign minister, said. 

Mr Perron was quoted in a Mexican ma gazine as saying 
he had never seen the level of corruption that exists in 
Mexico, that the government's war on drugs was a sham 
and that Washington's pressure on Mexico over drugs was 
a game. 

“The remarks made by Ambassador Perron, he 
recognises, are inappropriate for a diplomatic 
representative,” said Mr Axworthy. AP. Ottawa 


Building permits fall 

The value of Canadian building permits Issued in August 
dropped 2JJ per cent from the previous month to C$2 ^bn 
(US$1 .SbD), but analysts said the fall represented a 
temporary pause in an otherwise surging market. 

Statistics Canada said much of the decline was due to a 
municipal strike in Vancouver, resulting in a 10 per cent 
drop in the value of building permits issued in British 
Columbia during the month. Scott Morrison, Vancouver 

tie was given antibiotics to combat his infection 
ut suddenly they stopped working. 

Why ? Because the disease- 

Pathogens have an amazing 
ability to adapt - either destroying 
familiar antibiotics or budding 
highly effective protective walls 
against them. 

Developing new 
antibiotics to fight 
resistant bacteria. 

The researchers at Hoechst 
Marion Roussel, one of the world’s 
leading pharmaceutical companies, 
have launched a campaign to 
develop new antibiotics to combat 
resistant bacteria. 

This is one of the many way s 
we are doing research today for a 
healthier tomorrow. 

Hoechst AG 
D-65926 Frankfurt 

Hoechst is an international group 
of co mpanies spearheading inno- 
vation in Life Sciences and Industry 
With more than 140,000 people 
worldwide, last year’s sales totalled 
DM 51 billion. 

•. \ 

Hoadwt W*ton Rouasei 

TV nnii—inrlr* — 1 — r ”* 

Finding new ways. Hoechst 

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Engineer adjusts a brokerage firm antenna yesterday 

Indian SE 
works to fix 
satellite link 

By Krishna Guha in Bombay 

India's National Stock 
Exchange, paralysed by the 
loss of one of its communica- 
tions satellites, yesterday 
outlined a rescue strategy 
designed to resume trading 
by Thursday. 

The Bombay-based 
exchange has been closed 
since the Insat 2-D satellite 
suffered a partial power fail- 
ure last Wednesday, sever- 
ing the link between remote 
broker terminals and the 
exchange's central com- 

P lans to restore the link 
by using Insat 2-D’s surviv- 
ing capacity had to be torn 
up after the satellite suffered 
a second, total power loss on 

“We have had to start 
again." said Ravi Narain, 
deputy manag ing director of 
the National Stock 
Exchange. “We had not 
imagined that there could be 
a double failure.” 

Under the rescue package, 
the exchange will move bock 
to an old and faulty satellite, 
Insat 2-A which was being 
phased out in favour of Insat 
2-D.The old satellite has a 
wobble which disrupts sig- 
nals during afternoon trad- 
ing. At one stage it discon- 
nected up to 400 terminals a 
day. causing havoc. 

The exchange has since 
modified its software and 
believes that “only 35 to 40" 
terminals will lose their sat- 
ellite link each day. “Unfor- 
tunately it Is a random 
occurrence." said Mr Narain. 

He said that moving to 
Insat 2-A was “the most 
effective interim solution. 
The NSE expects to transfer 
700 or the 781 terminals from 
Insat 2-D to Insat 2-A by 
tomorrow evening. 

Every broker would have 
at least one terminal live. Mr 
Narain said. But big brokers 

might have to do without 
one or two of their screens 
until Friday. 

Mr Narain said the 
exchange could not move 
directly to a new satellite 
without closing for "at least 
three weeks". But he said 
te rminals would gradually 
be moved on to a newer sat- 
ellite with no further loss of 
tr ading . 

The NSE is bolding an 
emergency meeting today to 
discuss the plight of stock- 
brokers who were stuck with 
open trading positions when 
Insat 2-D failed. According to 
Exchange rules, they have to 
settle trades outstanding 
today. They cannot close out 
their positions because the 
exchange is still shut. 

“They will have to do 
something, " said Nozer 
Shroff, joint managing direc- 
tor of DSP Merrill Lynch 
Securities. He said the 
exchange could allow bro- 
kers to roll over trades into 
the next settlement cycle or 
allow a special period of 
trading on Thursday. 

Some local speculators and 
arbitrageurs are badly 
exposed. However most for- 
eign institutional investors - 
whicb do not keep open 
speculative positions - view 
the closure of the NSE as 
“an inconvenience rather 
than a crisis". 

Brokers have been able to 
carry on trading in Indian 
stocks through the country’s 
regional stock market 
including the Bombay Stock 
Exchange, the NSE’s great 

However Mr Shroff said 
trading on these exchanges 
was "cramped”. “A lot of vol- 
ume at the other exchanges 
is arbitrage trade spinning 
off the NSE." he said. 

Traders said that overall, 
volumes were down by at 
least 25 per cent. 

Editorial Comment, Page 15 

Shanghai real estate market down 50% 

By James Hanfing hi Shanghai 

Shan ghai 's real estate market has 
fallen nearly 50 per cent in three 
years and is set for further decline, 
according to property analysts 

A new property index launched 
today shows commercial rents in 
Puxi, downtown Shanghai, have 
fallen 4&9 per cent since the peak 
in 1995. and sales of residential 
property have fallen to one-seventh 
of 1994 levels. In Shanghai's new 
business district, Pudong. grade A 
rents have fallen 42.9 per cent. 

Jones Lang Wootton, the interna- 
tional property consultants and 
authors of the index, say Shanghai. 
China's biggest city, has emerged 
as “one of the region’s key cities. . . 
and a focus for investment activ- 
ity'', but warns: “Rentals win con- 
tinue to correct down war ds before 

Analysts in Shanghai forecast 
that commercial rentals could fell 
by as much as 40 per cent 
residential rents by about 30 per 
cent over the next 18 months, as 
excess and still growing supply 
depresses prices. 

James Hawkey, head of research 
at JLW in Shanghai, says the city 
has seen a “slight rebound” in pur- 
chase activity in 1997, but expects 
to see “a continued fall in rental 
prices through the next year, fell- 
ing more moderately in 1999". 

Between 1993 and 1996. as Shang- 
hai opened its doors to interna- 
tional business, property demand 
far exceeded supply, pushing rents 
to some of the highest levels in the. 
world, encouraging a flood of 
investors and developers into 
building new office blocks and resi- 
dential properties. 

Rapid construction fias caused a 
severe oversupply problem, exeat . 
ing vacancy rates in tlie old part of 
the city of 29.7 per ceaiLby the.end 
Of last wimrth. ?w~ twi ittfltt-k iuHnwa 
district, being developed. Into- Chi- • 
ns’s Wall Street, the vacaricy rafe 
was 71 per cent 

Sam Crispin, -head of research at ■ 
the property services company ". 
First Pacific Davies, also expects a 
continued slide in rentalprices in 
1998 as new b uildings ; open, offer- ; 
Ing more office space arid “kno ck-- 
. ing rents dowxr another notch"- j : ' 

Shanghai at present' boasts 2m 

square; metres of oversea a sale 
office' space arid square metres 
of domestic tdb offic e space and 
expects to add a further 5.5m 
square metres of space by .the year 
1 20BL, Mr Crispin says. 

Though; rental prices are “a long 
-way from a rebound", he points out ; 
that property yields . in .S han g h ai. 1 
remain f av ou rable compared with' 
other cities In- the region, such a$ 
Hong Rang. He' estimates Shan g h ai 
■ TB fdflaptlflT yi eM s remain as high 
15 per and 
are 10-15 per cent, against 6-7 
, cent in Hong Kong. • f 

More of the future slips Ramos’s 


Even influencing 
who will succeed 
him is proving 
difficult for a 
president caught 
in the regional 
financial turmoil 

A mid the daily batter- 
ing endured by the 
peso and the Philip- 
pine Stock Exchange one 
man in Manila is looking 
particularly beleaguered. 

It is President Fidel 
Ramos. Several months ago 
“Steady Eddie”, as the presi- 
dent is known, could do no 
wrong. He watched over a 
booming stock market, a sta- 
ble peso, healthy foreign 
investment and a fifth year 
consecutive year of eco- 
nomic recovery. 

But a long and bitter 
debate over whether the con- 
stitution should be changed 
to let the president stand for 
a second term and a cur- 
rency crisis that has 
knocked a third off the value 
of the peso in three months 
have taken their toll on Mr 

And the way in which it 
may prove most telling is in 
the succession. In the Philip- 
pines. the incumbent presi- 
dent's influence in national 

elections has tended to be 
crucial. In 1992, for instance, 
Mrs Corazon Aquino’s 
“anointment" of Mr Ramos 
was widely credited with 
ensuring his election, albeit 
as a minority leader. 

Now, with Mr Ramos’s 
attempt to have the constitu- 
tion changed to allow him to 
stand for a second term all 
but dead and burled, the 
finanrtai community regards 
his influence over the suc- 
cession as more important 
than ever - not least 
because it views one of the 
challengers with uncon- 
cealed horror. 

The huge popularity of 
Joseph Estrada, the former 
movie actor turned populist 
vice-president, contrasts 
with the consistently poor 
showing from Mr Ramos’s 
apparent favourite, Renato 
de Villa, the former defence 

The consistently buoyant 
ratings of Mr Estrada, whom 
many suspect would return 
the Philippines to the eco- 
nomically destructive 
"cronyism” of the Marcos 
years, also casts uncertainty 
over a commitment to deep- 
ening the liberalisation 
reforms that have spear- 
headed the economic revival. 

The economy has always 
been the centrepiece of the 
Ramos political agenda. And. 
although the Philippines has 

Philippines: no t-s o-steody Eddie- 

avoided the damaging con- 
frontational approach 
adopted by Mahathir 
Mohamad, the Malaysian 
prime minis ter, in dealing 
with the regional financial 
crisis, there is little room for 

"What can he do?” says 
Neil Saker, head of economic 
research for Asia at SocGen 
Crosby in Singapore. “Bol- 

ster the peso by lifting inter- 
est rates? That hurts compa- 
nies. A further devaluation? 
That would hurt the real 

While the financial com- 
munity in Manila’s central 
business district of MakaH 
generally appreciates the 
south-east Asian currency 
crisis is a regional phenome- 
non over which the govern- 

ment ha& limited cohtroL 
“for the man. hi the jeejaney 
[local bus] President Ramos 
must be looking less and less 
like ‘Steady Eddie',” says 
Keith Craig, managing direc- 
tor of Indosuez WX Carr 
Sec uriti es in Manila i 

Although Mr • Ramos’s 
recent call for Filipinos to 
“weather this storm 
together” appeared like 
sound economic sense, it had 
a less seductive ring to it 
thaw Mr Estrada'S camp aign 
promises of adequate sup- 
plies of .food at affordable 
prices, war on corruption 
and a clampdown on crime. 

Mr Estrada is by no means 
the only candidate who 
threatens to confound Mr 
Ramos’S mfhwnffa 0 V 6 T tho 
succession. According to the 
latest polls, Gloria Macapa- 
gal-Arroyo, a business- 
friendly candidate, shares 
the lead with Mr Estrada at 
19 per cent. Mr de Villa is 
more thaw io points behind. 

Mrs Macapagal-Arroyo ha« 
a populist appeal to the 
wider electorate with a 
quick song and. dance on- 
stage but is just as' capable 
of impressing a group of 
investment bankers on the 
need for further economic 

The road to a smooth polit- 
ical t ransition is perilously 
fraught for Mr Ramos. How 
long the regional financial 

Robust exports figures and 
inflation at below expecta- 
tions foiled to stop titt ; I 
Manila stock market falling 
&4 par cent yesterda$.a8 
overnight interest raws hit 
105 per cart, Justin tfarazzi 
writes. Philippine exports 
rose 23 per cent on last year 
to Slflbn in the first three 
quarters, according to gov- 
ernment figures published 
yesterday. Infla tion rose 
from AS per cent in^ngust 
to 5^ per cent in September 
on an annualised baas. 

Gabriel Singson, efctral 
bank governor, was (bnfi- 
deht that full-year aterage 
inflation would be atpe 
bottom end of the 6 q 7 per 
cent t ar get 

turbulence lasts and i what 
flriimt tho economic ill-out 
womans ' will hugely overn 
the political agenda n the 
months ahead. 

But, says one diplo iat, it 
would be a mistake tx write 
the president off “Nui crons 
times in his caret Mr 
Ramos has confo nded 
everyone with his tatical 

mannw i gri n g gnij Whn all 

die cards are cm the defc, he 
enHa up winning. The sakes 
may have been raised bow, 
and he may have a m 
hand, but Mr Ramos iqi 
playing poker.” 



NZ current account deficit hits record 

By Terry Hall m Wellington 

New Zealand had a record 
NZ$6bn (US$3.8bn) balance 
of payments deficit in the 
year to June due to a sharp 
rise in imports which 
Included a new Australian- 
built frigate for the navy. 

A sharp deterioration in 
the current account had 
been expected, but the figure 
was about NZS700.000 worse 
than the most pessimistic 
forecasts, and led to sharp 
falls in the New Zealand dol- 

In Wellington it ended the 
day down 1 cent against the 

Australian dollar. In Lon- 
don, it finished 1.25 cents 
lower against the US dollar, 
and over 2 cents against ster- 
ling. Domestic interest rates 
and New Zealand shares 
showed modest gains. 

Winston Peters, the trea- 
surer, said the deficit repre- 
sented the bottom of the cur- 
rent economic trough and 
the figures would improve. It 
was vital that the govern- 
ment continued to run bud- 
get surpluses. 

The current account defi- 
cit has been steadily worsen- 
ing since 1993. Initially this 
was because of a worsening 

trade balance, mainly 
blamed on a strong New Zea- 
land dollar and the Reserve 
Bank's tight monetary pol- 

More recently the deficit's 
problems have intensified as 
the high value of the dollar 
has encouraged New Zea- 
landers to holiday abroad, 
and discouraged tourists. 

There have been substan- 
tial rises in other invisible 
payments including divi- 
dends by overseas-owned 
companies and a slowdown 
in offshore earnings by New 
Zealand groups. 

As a percentage of gross 

domestic product, the deficit 
climbed from 48 per cent in 
the March quarto* to 6.4 per 
cent in June. Excluding the 
new frigate, which cost 
NZ$563m. the deficit was 
per cent according to Static 
tics New Zealand. • ' 

While the figure is consid- 
ered worrying In New Zea- 
land, it is still less than the 
deficits in the mid-1980s 
when the economy enjoyed a 
short-lived boom. Between 
June 1984 and December 
1986, the deficit hovered 
between 6.4 and &9 per cent 
Remarks by Bill Birch, the 
minister of finance, in Lon- 

don suggesting New Zealand 
oould drop its top tax rate 
from 33 to 25 pier cent have 
sparked criticism from lead- 
ers of the government’s 
coalition partner. New Zee- 
Jand . . , . , . . , . , 

Mr 1 Peters, -who 'is 'alio' 
leader of NZ First, said the 
suggestion was “not a 
starter". . . 

However Mr Birch’s 
remarks were welcomed by 
business circles, including 
the Manufacturers’ Federa- 
tion. Mr . Birch's remarks are and the National party 
seen as supportive of Jim NZ First policies in 
Bolger, the prime minister, days, following a a big drop) 
who has: distanced himself.:, in NZ First's popularity. 

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Parlies interested in submitting Binding Offers for the 
acquisition of the shares of MEL-MACEDON1AN 
PAPER MILLS S.A., currently owned by the 
(N.B.G.) S.A. in accordance with the invitation 
published on 5.8.1997. are hereby notified that the final 
Draft Share Purchase Agreement based on which binding 
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Consequently, the deadline for the .submission of Binding 
Offers is extended to Wednesday. 22.10.1997. up to and 
not later than 13:00 hours. The Binding Offers submitted 
will be unsealed on the same day at 14:00 hours. 

All other special terms and conditions contained in the 
^pubtote^mvi^MOf5^1997 remain valid. ^ 




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□ Hamas leader returns to Gaza 
P More detainees to be freed 


King Hussein 
extracts big 
from Israel 

By Judy Dempsey 
in Jerusalem 

Sheikh Ahmed Yassin, the 
spiritual leader of Hamas, 
the Islamic Resistance Move- 
ment, yesterday returned to 
a tumultuous welcome in 

Israel agreed to allow him 
back in exchange for two 
Mossad agents arrested in 
Jordan for a batched assassi- 
nation attempt on another 
Hamas leader. 

Israel's surprise move - 
following a promise to 
release a further 22 political 
prisoners yesterday and up 
to 60 in the coming weeks - 
was made after King Hus- 
sein of Jordan extracted 
heavy concessions from Ben- 
jamin Netanyahu. Israeli 
prime minister. 

Mr Netanyahu had been 
reluctant to release any 
political prisoners, particu- 
larly after the two recent 
suicide bomb attacks in 
Jerusalem for which Hamac 
claimed responsibility. 
Those attacks apparently 
prompted the prime mi motor 
to authorise an assassination 
attempt on Khaled Meshal a 
Hamas leader living in Jor- 

The failed attempt, by 
Mossad agents holding Cana- 
dian passports, led to a 
flurry of diplomatic activity 
between Mr Netanyahu and 
King Hussein. 

The king, furious with 
Israel, was determined to 
extract concessions. How- 
ever, he denied that any ifnic 
with the return of the two 
Mossad agents had been 
made. The agents were 
expected back in Israel last 

Avigdor Kahalani, Israel's 
public security minister, said 
he expected the prime minis- 
ter to set up a commission to 
establish how the assassina- 
tion attempt happened. But 
he said the commission 
would not scrutinise the 
decision-making process - as 
demanded by opposition pol- 

Israeli commentators have 
criticised the way the deci- 
sion was made, suggesting 
serious disagreements 
between Mr Netanyahu and 
the intelligence services. 
They were also critical of 
Mossad action in Jordan, one 
of Israel’s closest Arab allies. 

King Hussein quickly 
turned the event from per- 
sonal embarrassment and 
possible instability to his 
advantage, stemming opposi- 
tion criticism that Jordan 
had been too beholden to 
Israel in the last few 

Through extracting heavy 
concessions from Mr Netan- 
yahu, he may have limited 
the damage in the run-up to 
elections in Jordan. He may 
also have strengthened his 
bargaining position in the 
peace process and his rela- 
tions with the Israeli prime 
minister, whose motives, the 
King recently said, he could 
no longer understand. 

Ultimately, much will 
depend on Sheikh Yassin’s 
future role and his relations 
with Yassir Arafat, president 
of the Palestinian Authority 
who, under pressure from 
the US and Israel, has been 
forced to crack down on 


“Hamas has been boosted 
by his release. They are the 
winners in this entire 
affair," said Efraim Inbar, 
Middle East analyst at Bar- 
Ban University. The ques- 
tion is whether Sheikh Yas- 
sin will galvanise support 
for the peace mov ement or 
be a thorn in Arafat's side." 
At a news conference in 

Amman, min utes before he 
flew in King Hussein's heli- 
copter to Gaza. Sheikh Yas- 
sin said he would continue 
the struggle to free Palestin- 
ians from Israeli occupation. 
“There will be no halt to 
armed operations until the 
end of the occupation," he 
said. But he added: “I con- 
sider my release a positive 
indication and we' will con- 
tinue to be advocates of 

Discoverer of 

prions wins 
Nobel prize 

By CBve Cookson, 
Science Editor 

Stanley Prusiner, professor 
of biochemistry at the Uni- 
versity of California, San 
Francisco, has won this 
year's Nobel Prize in medi- 
cine for his discovery of 
prions - the strange infec- 
tious proteins that destroy 
the brains of people with 
Creutzfeldt- Jakob disease, 
cattle with BSE and sheep 
with scrapie. 

Prions are an entirely new 
class of infectious agent 
They are remarkable 
because, unlike viruses or 
bacteria, they contain no 
genetic material. 

Their terrible impact is 
achieved solely by convert- 
ing normal brain protein 
molecules into their own 
deadly shape, in a slow bio- 
chemical chain reaction. 

When Prof Prusiner first 
proposed the prion hypothe- 
sis in 1982, it was extremely 
controversial. Most scien- 
tists believed that diseases 
such as CJD and scrapie 
were caused by mysterious 
slow viruses or virinos, 
though no one had isolated 
them, and they could not see 
how a protein without genes 
could reproduce and multi- 

Since then, a large body of 
evidence has accumulated to 
show that a prion can 
change harmless "prion pro- 
tein" into Its own form sim- 
ply through contact in the 
brain. But some scientific 
doubts remain. 

Lars Edstroem. neurology 
professor at Sweden's Karo- 
lins ka Institute which is 
responsible for awarding the 
Sim Nobel medicine prize, 
said yesterday: “There are 
still people who do not 
believe that a protein can 
cause these diseases but we 
believe it." 

In London, John Callings, 
head of the prion diseases 

Prusiner. identified agent of 
infection in mad cow disease 

research group at the Impe- 
rial College medical school, 
said the prize was well 

"Prusiner has done heroic 
things to follow through his 
hypothesis.” said Professor 
Collinge. But he was sur- 
prised that the Nobel had 
come so soon “when there 
are still some important 
unresolved issues". 

One issue that is not yet 
fully understood is how 
there can be several differ- 
ent strains of prion disease, 
depending on the source of 
infection, if no genes are 

Prof Prusiner, 55, believes 
that, as scientific knowledge 
of prion propagation 
increases. It will be possible 
to develop treatments for 
CJD, through drugs that pre- 
vent the transformation of 
normal protein into prions. 

The research may also 
shed new light on other neu- 
rological diseases, incl uding 
Alzheimer's. These are prob- 
ably not caused by prions 
but, like CJD, they Involve 
the build-up of harmful pro- 
teins in the brain. 

ban on Leakey par 

By Mrcheto Wrong in Nairobi 

Sheikh Yassin smiles as he leaves for Gaza yesterday. The freed Hamas leader said : 
would be an advocate for peace 

The Kenyan authorities 
yesterday refused to legalise 
a . political party confounded 
by Richard Leakey, the 

and w ildlife 

campaig ner, raising doubts 
about the sincerity of the 
government’s recent com- 
mitment to electoral reform. 

In a decision likely to cast 
an embarrassing shadow 
over an official visit to 
Kenya by Clare Short, 
Brit ain 's international devel- 
opment secretary,-, the regis- 
trar of societies bluntly 
rejected the Mr Leakey's Saf- 
ina party’s registration 

He cited colonial-era legis- 
lation denying authorisation 
to a society with “any pur- 
pose prejudicial to or Incom- 
patible with peace, welfare 
or good order” and described 
Safina’s wimp , which wppwi 
" boat” or "Ark" in Swahili, 
as “undesirable". 

Bat he gave no details 
why the party should be 
regarded as a security 

rtirflflt. NOT did hp pr plam 

why it had taken 28 months 
since Safina lodged its appli- 
cation to deliver a judgment 

Members of the party, 
which will now be unable to 

take, part in elections' due fry 
the year's end, said that 
while .they were “sad .and 
disappointed" . at the 
decision; they .were., not. 

The Karra clique dare not 
face in a fair contest 

j»nd not being quite sure of 
their ability to rig every 
province, Karra prefers no 
contest at aB with. Safina," 
Mr Leakey told a press 

“An election cannot be 
free and fair when for two 
and a half years a party. that 
appears to enjoy the wide 
support of the Kenyan public 
cannot compete." 

Registration of Safina; 
which groups human rights 
activists, lawyers arid 
opposition dissidents, his 
long been regarded by 
western -• donors as a 
significant indication of 
President Daniel arap Mai's 
willingness to face a real 
contest in Kenya's second 
multi-party polls. 

Kami’s decision last 
month to support a sweeping 
range of reforms to Kenya’s- 
constxtntion and legislation 
- ran g in g from the repeal of 
laws allowing detention 
without trial to opening up 
state media to opposition 

parties — - was bailed'ja 
diplomats as heralding! 
new era in national polines 

■ ' But: as. the ' reforms' -aai 
moved, through peitiafasl 
there have beenf^&anpl 
. change . bn the' ground 
. lending credence/ ft 

■ suspicions that Mr Mof s ahj 
hug been to ernascSQhxe tin 
pro-reform movereenf wixfe 
doing nothing to. damage h» 
electoral chances;.;' I- - 

Opposition.. .. candidates t _ 
touring the : co umay -have H 
been harassed .ly,; : .the> 
security forces'ang stoned ± 
by Kami supporters? A \ f 

.Last weekend pifleemen 
brake up ah apposapibiira!^ 
in the westan Kenran tawn 
of Kisumu, jEti&ltitig.&k 
MPs, in spite alUd-bcta^t 
organisers had been granted 
a licence. ..i f ' 

“Kami ls 'tefling'vthe 
international (brhm u nity it 
is reforming bif -pot a single 
action confinrSV this," sas?- 
Gibson Kamm ...Khria, -a; 


jcfn town." 
tihg, six 
fecrfhai • 

lawyer playing 
the reform can! 

This, dedsia 
home to many ! 
there is not! 
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j^_rgtorma nd crime on the agenda in warm discussions between the leaders 

Talk of ‘new 

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By John Kampfner, 

Chief Political 
Corr0s P«Hiefit, in Moscow 

A. meeting of minds was 
proclaimed yesterday 

between one of the world's 
most enduring leaders and 
one of its most youthful, as 
Boris Yeltsin and Tony Blair 
spoke of a new era in Angio- 
Russian relati o ns. 

The UK prime minster, on 
his first visit to Russia, 
appeared taken aback by the 
convivial reception be 
received from the Russian 
president After a bear-hug, 
Mr Yeltsin spoke of his 
“love" far “young and clever 
people”. He described Mr 
Blair as" “energetic and 
thrusting". . 

The leaders . discussed a 
range of economic and stra- 
tegic issues. These included 
a . promise by. Britain to 
make Russia, a full member 
of what would be the G8 
group of leading industrial 
nations at its meeting in Bir- 

mingham in the English 
Midlands in 1998. They also 
talked of an increase in Brit- 
ish export credits for compa- 
nies dealing with Russia and 
Russian tax reform to 
improve the investment cli- 

Russian officials said Mr 
Yeltsin regarded Mr Blair as 
having the potential to 
assume the same importance 
as a European leader as 
Chancellor Helmut Kohl of 
Germany and President Jac- 
ques Chirac of France. 

Mr Yeltsin presented Mr 
Blair with photocopies of 
diaries from British service- 
men captured by the Ger- 
mans during the second 
world war. They fell into the 
hands of the Red Army and 
were subsequently kept in 
Soviet archives. Officials 
said the originals would be 
handed over once legal 
obstacles had been over- 

Mr Blair and Victor Cher- 
nomyrdin, the Russian 

Yeltsin (light) said Blair was potentially as important a European leader as Kohl or Chirac 

prime minister, then signed 
an agreement on enhancing 
police and security service 
co-operation in the fight 
against organised crime. 

Mr Yeltsin surprised his 
guests by reciting passages 
hum Mr Blair's speech last 
week to the annual confer- 
ence oF the UK’s governing 
Labour party. 

Mr Blair returned the com- 
pliment by praising Mr Yelt- 
sin’s six years as leader as 
“an extraordinary story of 
progress and reform which 
couldn't have been carried 
out but for [his] personality 
and dynamism" . 

Mr Blair wanted to use bis 
visit to mingle informally in 
the crowds, but a combina- 
tion of beavy rain and 
the security fears of 
bis hosts gave his walk- 
abouts an old-fashioned 

A visit to the newly built 
Okhotny Ryad underground 
shopping centre below the 
Kremlin walls bore elements 
of the Communist era 
- the centre is not yet 
open to the public and 
onlookers were kept well 
away outside. 

He then met the managers 
of the British-owned Next 

and Mothercare stores, fully 
stocked in spite of the 
absence of customers. 

From there he went on a 
brief ride on the Moscow 
Metro, with the station 
sealed off for the occasion, 
and ended bis trip by taking 
part m a radio soap opera, 
reading his lines as a com- 
passionate foreign dignitary 
helping a hapless Russian 
woman who had spilt her 
basket of apples in front or 
his motorcade. 

His appearance was broad- 
cast on last night's edition of 
House Seven. Entrance Four . 
a nightly drama. 

By Alice Rswsthom 

Scores of products related to 
the Spice Girls, one of the 
most successful pop groups 
of the 1990s, will go on sale 
over tbe next month in a 
wave of endorsements and 
merchandising unprece- 
dented in the music indus- 

Cadbury Schweppes, the 
confectionery group, expects 
later this week to conclude 
talks on introducing Spice 
Girls chocolate bars. The 
publicity generated by that 
agreement and similar deals 

with Sony electronics, Asda 
supermarkets and Walkers 
Crisps results from the 
efforts of 19 Management, 
the Spice Girls' management 
company, to promote Spice- 
world. the band's second 
album, to be released on 
November 3. 

But some companies have 
been deterred by the volume 
of the band's promotional 
activities. British Telecom- 
munications began talks to 
introduce Spice G iris’ phone 
cards this summer, but with- 
drew because of concern 
that they were endorsing too 
many other products. 

19 Management has 
appointed Brand Power, a 

jlUy her father is working in Lyons. 

Tonight, she’s playing in Oslo. So it won’t be possible for them 

to be together on one of the most important evenings of her young life. 

But soon, it will be. 

A few years ago, the Parliament of Norway approved a plan 
to construct a totally new international airport that would streamline service to Oslo. 

It was a challenging project that presented some serious problems for the builders 
until they met the engineers of ABB who showed them how ingenious engineering 

could help provide some answers. 

Now the project is underway and ABB and its partners are turning 

the new airport at Gardermoen into a reality. 

New runway lighting will help make landings and take-offs safer and more punctual; 

the computerized control equipment for a new baggage handling system 
will make getting out of the terminal easier; and the associated rail connection 
will make getting home quicker. 

To the Norwegian public, it will mean safer and more efficient travel 
to and from Oslo. But to the father of one young violinist, 

it will mean something fer more. 

Because on an evening when his daughter is playing 

Schubert’s ‘Sonata in B Flat; he will be there. _ ^ 



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Sony websites 
to sell adverts 

Sony Mnsic, the record 
company, plans to start sell- 
ing advertising space on its 
Internet sites. Many US 
record companies already 
carry advertising on their 
6ltes, which typically 
include information about 
tours and releases. So far, 
their UK counterparts have 
used their sites purely for 
promotional purposes. But 
Sony Is convinced that the 
n umb er of people visiting its 
European sites is high 
enough to attract advertis- 
ers. The company has 
appointed TSMSI. a special- 
ist online media consul- 
tancy, to sell advertising 
space on all its European 

new consultancy founded by 
Edward Freedman, former 
merchandising manager of 
Manchester United football 
club, to develop a range of 
official Spice Girls merchan- 
dise. Spice Girls mugs, bed- 
linen and T-shirts will go on 
sale this month. 

Traditionally, managers 

limit promotional activities 
for fear of over-exposing 
their acts. The impact of the 
Spice Girls' deals on their 
image and sales will be 
closely monitored by the 
music industry. 

The Spice Girls soared to 
success last aut umn by sell- 
ing more than 5m copies of 
Wannabe, their debut single, 
and 17m of Spice, their first 
album. Last year, 19 Manage- 
ment, whose contract with 
the group comes up for 
renewal next spring, 
appointed Broadcast Innova- 
tions, a marketing consul- 
tancy, to broker sponsorship 
and endorsement agree- 

After clinching a deal with 
PepsiCo, whereby the Spice 
Girls appeared in the soft 
drink company's advertising. 
Broadcast Innovations has 
sold the rights for branded 
companies to link with the 
group on an exclusive basis 
in other product sectors. 

Last week, Sony struck an 
agreement to release a Spice 
Girls game on its PlaySta- 
tion system early next year. 
Asda will introduce 40 spe- 
cial Spice Girls products, 
including balloons and bis- 
cuits, to its supermarkets 
early next month. 

BT set to Jobs in 
challenge the home 
business cost over 
taxes $550bn 

By Nicholas Timmins, 

Public Policy Etftor 

British Telecommunications 
next week launches Britain's 
biggest ever rating appeal. 
Rates are business taxes and 
are based on a company's 
rateable value - the notional 
rental income from property. 
BTs rateable value has been 
put at £552m ($894m). 

The appeal could signifi- 
cantly affect the £l.lbn the 
government receives in busi- 
ness rates from the priva- 
tised utilities. 

BT is challenging the 
assessment of the value of 
Its network - effectively all 
its business infrastructure 
from telephone exchanges to 
telegraph poles and wires - 
other than its offices and 

When it was state-owned, 
BT paid its business rates 
according to a specific for- 
mula. But as a privatised 
utility it was moved in 1995 
to payment under the nor- 
mal rating system. 

Tbe other privatised utili- 
ties - from power generators 
and distributors to water 
companies and docks - are 
all due to be moved from 
their formulae to conven- 
tional rating in 2000, when 
the next business rate reval- 
uation is due. 

Their collective rateable 
value is in excess of £3bn. 
according to the Department 
of the Environment, Trans- 
port and the Regions, produ- 
cing 9 per cent of the busi- 
ness rate, which this year is 
expected to total £l2.7bn. 

BT, which yesterday 
refused to discuss the basis 
of its appeal other than to 
say it viewed its present 
assessment as “ unfair and 
excessive”, is understood to 
be in dispute over which of 
two methods of valuation 
should be used. 

By Richard Adams, 
Economics staff 

Cooking, cleaning and other 
work around the home 
would have cost at least 
£340bn ($550bn) last year if 
it had to be paid for at mar - 
ket rates, according to a pio- 
neering study. 

This figure is almost as 
much as Britons received 
from paid employment last 
year. It shows that house- 
work - most of tt done by 
women - takes up more 
time each day than paid 

“Every time a person digs 
the garden or goes to the 
supermarket or does the 
washing up. this is work 
jnst as surely as agricul- 
tural labouring, serving 
hamburgers or working In a 
hotel,*' says the report pub- 
lished today by tbe Office 
for National Statistics. 

The figures are based on a 
national time-use survey of 
2,000 adults. It found that 
tbe average person spends 
nine hours a day sleeping or 
resting, more than two 
hours eating and nearly four 
hours at leisure. 

Paid work and prepara- 
tion for it accounts for 3.5 
hours a day - the figure Is 
depressed because the sur- 
vey covers people who do no 
paid work. Unpaid work, 
such as shopping, cleaning, 
child-care and do-it-yourself, 
takes about 4.5 hours a day, 
the survey showed. 

Women do 60 per cent of 
work in the home and men 
do 40 per cent 

Tbe total monetary value 
of unpaid household work, 
including tax, national 
insurance and pensions, 
would be between 56 and 
122 per cent of UK gross 
domestic product The figure 
depends on how unpaid 
work is valued. 

Equitas accounts 
cheer ex-Names 

By Christopher Adams, 

Insurance Correspondent 

Equitas. the company which 
assumed billions of pounds 
in financial liabilities that 
threatened to destroy 
Lloyd’s of London, yesterday 
gave thousands of former 
Names good reason to be 
cautiously optimistic, saying 
its early performance had 
been better than expected. 

But its second set of pub- 
lished accounts again 
included a qualification from 
Coopers & Lybrand, the 
auditors, which reiterated 
doubts about reliability of 
data used to assess the risks 
faced by Equitas. 

Better than expected cash- 
flow and a 5 per cent 
Increase in the cash surplus 
to £617m ($1 ,000m) from 
£58&n is likely to cheer thou- 
sands of former investors 
who backed Lloyd's and 
whose personal losses were 
so huge that they faced 
financial rain. 

Were Equitas to fail, the 
former Names, along with 
some of those still under- 

writing, might be pursued by 

Equitas paid out vashn in 
claims during the seven 
months to March 31, less 
than forecast last September, 
and collected £840m from 
reinsurers that owed it 
money, more than expected. 

David Newbigging, chair- 
man, said cashflow was 
"encouraging”, but said it 
was impossible to tell if this 
was due to settlements being 
smaller than expected 

Mr Newbigging, who plays 
a non-executive role at Equi- 
tas, announced that be 
would resign in the second 
half of next year. The com- 
pany has formed a commit- 
tee to find a successor. 

Equitas said total out- 
standing claims dropped 
from £14.8bn to £ll.8bn. 
Investment income was 
£256m. The company said 
uncertainty still surrounded 
future claims. About 40 per 
cent of Equitas’s liabilities 
stem from general liability 
policies insuring against pol- 
lution and asbestos related 





Crisis at Turkish owner’s main company prompted failure and stranded 7,000 tourists | UK news digest 

T our operator’s collapse shocks industry Morale test for 

?„ str ? lg ^ned by wind- was apparently trading profitably. Edige, its only UK-based director, selling stakes to two unname d UK ( .OnSGlV All V 

way nans in London Calls from the dpimihiallgatinn nr ... u m . .i.ui. a,. rn> «em rail fhrnmrh 

By Scheherazade Oaneshkhu 
and Clay Harris in London 
and John Barham in Ankara 

Sun Express Holidays, the 
SunTours operator whose collapse 
stranded 7.000 customers overseas, 
crashed because of a financial cri- 
sis at its Turkish owner's main 
travel company. 

Sun Express was the 27th biggest 
UK tour operator and the biggest 
one to fail for several years. It was 
licensed by the Civil Aviation 
Authority to carry 148,000 passen- 
gers this year, more than twice as 
many as in 1996. 

The failure was a surprise to the 
holiday industry, which is expect- 
ing higher profits this year because 

of strong demand fuelled by wind- 
falls from the demutualisation of 
savings and loans institutions. 

The CAA said its priority was. to 
arrange the return of SunTours' 
stranded passengers, mostly from 
Turkey, but also from the Greek 
islands. Tunisia and the nan^ pg 
About 700 were put on six flight* 
yesterday. The CAA was unable to 
say how many forward bookings 
were affected. 

Based on the number of passen- 
gers it was Licensed to carry, Sun 
Express had posted a bond of £4.7m 
f$7.6m), which the CAA said 
appeared to be sufficient. The bond 
is used to reimburse holidaymak- 
ers when an operator collapses.' 

Sun Express's failure, although it 

was apparently trading profitably, 
raises questions about the CAA’s 
ability to oversee multinational 
companies. The CAA said: “Our 
remit is only with the company 
that is actually bonded.” 

Hie CAA has proposed measures 
to tighten controls on bonding, 

ine.lndmg; mating directors OF prin- 
cipals of a company give indemni- 
ties. The Air Travel Trust - the 
CAA's emergency back-up fund - 
fell into, the red for the first time 
last year because of under-bonding. 

Sun Express’s 1996 accounts 
showed ho clouds on the horizon. It 
reported pre-tax profits of £508,000 
on turnover of £35 Jm and positive 
cashflow after an outflow of nearly 
£2m the previous year. Izzet Tahir 

Edige. its only UK-based director, 
was yesterday unavailable for com- 

Its other director and sole share- 
holder is Haluk Semiz, co-owner of 
Tursem, a leading Turkish travel 
company whose banks last week 
refused to extend $30m in new 
loans. Tursem, which has annual 
revenues estimated at $800m, owes 
a total of about $57in, according to 
Kocbank, a leading bank creditor. 

Hie Turkish government is com- 
ing under pressure to support Tur- 
sem, which brings 500,000 visitors a 
year to the country. 

Tursem was also squeezed 
between dollar -denominated debts 
and D-Mark-denominated revenues. 
A deal to raise fresh capital by 

soiling stakes to two unnamed UK 
investors for $45m fell through. 
Last week, Mr Semiz said: "These 
are not recent problems. We had 
problems for a long time." 

• A compulsory hotel registration 
scheme to improve accommodation 
and attract mare tourists to Lon- 
don. was urged yesterday by Sir 
John fr-gan chan-man of the Lon- 
don Tburist Board. At a London 
Tourist Board conference on the 
capital's tourism industry. Sir John 
said London needed more and bet- 
ter quality hotel accommodation, if 
its tourism industry was to grow at 
sustainable rates. The growth of 
tourism spending in London at 5 
per cent a year trails the world 
average of 8 per cent 

Man in the middle of 
the Irish peace talks 

T he key figure in the 
Irish Republic's nego- 
tiating team at the 
Northern Ireland peace talks 
is an English-educated Prot- 
estant who Likes to recall the 
day in 1920 when his father's 
dog was shot by the Black 
and Tans, the British police 
in revolutionary Ireland. 

Martin Mansergh, special 
adviser to Bertie Ahem, the 
Irish prime minister, is the 
man credited with moving 
the Irish Republican Army 
to "go political". 

A shy man. Mr Mansergh 
appears out of place in the 
conspiratorial world of 
Fianna Fail (the populist 
governing party! politics. He 
is nonetheless part of a dis- 
tinguished tradition of 
Anglo-Irish Protestants - 
from Parnell to Erskine 
Childers - who have often 
seemed more devoted to the 
Irish cause than the “native” 

For all his intellectual 
gifts, he has. like them, 
proved himself a man of 
action. It was Mr Mansergh 
who at great personal risk 
conducted the first secret 
contacts with the IRA in a 
monastery in west Belfast, 
the Northern Ireland capital, 
in the early 1990s. 

Roy Magee, the Pres byte- 

Unionist leader 
to meet Clinton 

The opening of the political 
phase of the Northern 
Ireland talks will be over- 
shadowed today by the 
absence of David Trimble, 
leader of the Ulster Unionist 
party, the largest pro-Brit- 
ish party. The UUP yester- 
day stepped up attacks on 
Sinn Ftin. the IRA’s politi- 
cal wing, daring a US visit, 
where Mr Trimble is doe to 
meet President Clinton 
today. Mr Trimble warned 
he could not foresee a “posi- 
tive outcome’’ as long as the 
UK and Ireland insisted an 
the participation of Sinn 
Fein. Meanwhile, the Irish 
opposition has demanded 
the resignation of Ray 
Burke, the Irish foreign 
minister and head of the 
Irish delegation, over allega- 
tions of involvement in a 
land deals awmrial. 

rian minister who, as an 
intermediary for protestant 
paramilitaries, used to meet 
Mr Mansergh off the Dublin 
train, remembers a polite, 
rather gentle man. But he 
says "many loyalists were 

very curious how a Protes- 
tant with an Engli sh accent 
could be a republican”. 

Born In Woking in south- 
east England - and educated 
at Kings School, Canterbury, 
and Christchurch college. 
Oxford - Mr Mansergh has 
toned down his English 
accent, according to friends. 
He has even affected an Irish 
lilt - "something Parnell 
never managed", one says. 

He inherited his "broad 
anti-imperialist outlook” 
from his father, Nicholas 
Mansergh, the historian and 
Cambridge university 
teacher. He kept a farm in 
Tipperary, in the west of the 
republic, where his son went 
for school holidays. "A lot of 
his views would have rubbed 
off,” he now says. He still 
spends most weekends at the 
farm, which he shares with 
his brother. And. as if to 
prove his credentials, he 
employs an IRA veteran of 
the 1950s as Harm manager. 

As the parties start the 
search for a political settle- 
ment for Northern Ireland 
this week, it is Mr Mansergh 
more than Ray Burke, the 
foreign minister under fire 
at home over alleged land 
deals, who will shape the 
Irish government's tactics. 

No one knows the brief as 

CoSkta. Di£fln 

Heading for talks: Martin Mansergh (left) with Bertie Ahem (centre) and Ray Burke 

he does, having worked for 
all three Fianna Fail prime 
ministers - Charles 
Haughey, Albert Reynolds, 
and now Mr Ahem. He was 
even approached by John 
Bruton, from Fine Gael, the 
conservative main opposi- 
tion party, in 1994 though he 
turned him down. 

As a key author of the 1993 
Downing Street Declaration, 
which started the current 
peace process, he was the 
architect of the shift in 
Fianna Fail policy to accept 
that change in Northern 
Ireland can only come about 
with the consent of northern 

"If the British implanted 
the idea [of consent] in the 
Anglo-Irish Agreement [of 
1985], in the Downing Street 

Declaration, the Irish 
it their own.” says Paul Bew, 
the historian «r»ri friend of 
Mr Mans ergh. 

Mr Mansergh joined the 
Irish foreign service as third 
secretary. It is ironic that he 
was taken on as an Irish offi- 
cial only after the civil ser- 
vice rules were changed to 
allow non-Irish speakers - a 
change actually targeting 
Catholics from Northern 

His break came when he 
was headhunted as speech 
writer far Mr Haughey. He 
recently edited a book of the 
former leader's speeches and 
has remained loyal to him — 
even publicly defending him 
during his recent corruption 

■ But it is his contacts with 

the republican movement 
that have made him so 
invaluable to successive 
Irish gover nment s, wmi indi- 
rectly to the British. "Lon- 
don knew that we could 
deliver Sinn Ffiin [the IRA’s 
political wing], " be says. 

At a recent meeting of the' 
British Irish Association. Mr 
Mansergh denied sugges- 
tions that an ISA split was 
inevitable if Sinn F6In 

agreed to anything less than 

a united Ireland. Asked 
afterwards why he did not 
allow Sinn F&n’s own repre- 
sentative to speak for him- 
selL he said: "It would have 
had that, much less credibil- 
ity if it had come from 

John Murray Brown 

The scale of the task facing William Hague, the • 

Conservative leader, in rebuilding the - 

srtion party will become clear today as it “eetsfor . 
first annual conference since its shattering 
tion defeat in May. The conference, ^ thes^side_^Ht . 
of Blackpool in northern England, is expe cted to open 
with the disclosure that a significant mmonty of mem- 
bers have refused to endorse him as leader. 

Mr Hague will, however, use the outcome rf an unprece- 
dented poll on his leadership - which back s hun bya 

margin of around three to one- to push on with radical ; 
reform of the party’s structure. Among measu res . 

designed to rebuild the bond between party members aim 
Conservative MFs will be the introduction of a media- , 
nism for holding referendums of members on sensitive 
policy issues such as whether to join European monetary 
Sion Robert Peston 

Lex, Page 16 


Ruling against age of consent 

The European Co mmission on Human Rights is expected . I 
to announce this morning that UK legislation setting a 
higher age of consent for homosexual men than for het- 
erosexuals is a breach of human rights. The government 
is expected to respond to the announcement by confirm- 
ing that there will be a free vote in the House of Com- 
mons on legislation to reduce the age of consent for 
homosexual won to 16, the equivalent for heteros ex ua ls . 
Tony Blair, the prime minister, voted for equalisation _ 
when the issue was last debated and an influx of younger 
Labour MPs is expected to ensure legislation to equalise - 
at 16 will be carried. Simon Buckby 


Figures show output solid 

Manufacturing output remains solid, with increases in the 
production of computers and other investment goods bal- 
anced against fails in clothing and footwear. Official fig- _ 
ures for August showed an 0.1 per cent fell in output, 
compared with July. But it also revised upwards the fig- •• 
ure for July - so that output increased by 0.6 per cent 
during the three months to August The annual increase . 
in manufacturing was 15 per cent, compared with, the 
revised July figure of 1.8 per cent Total industrial product 
tion fell between July and August by 0.4 per cent fiat ' C; 
July’s growth was also revised upwards, from OS-td DL9 ’r K 
per cent The annual increase tn industrial outpt&roee ti* 
2*8 per rent _ Rjchnrd Adnms, 


Less than $25m given to charity . 

I Less than £i6m <$25m) has been donated by individuals to 
charities in response to the death five weeks ago of Diana, 
Princess of Wales, little more than a tenth of the £150m . 
same reports suggested had already been sent to her 
Memorial Fond alone. This comparatively small amount 
is in line with the overall decline in charitable donations 
by the public of about 20 per cent in real terras since 1993* 
according to the National Council for Voluntary Organisa- 
tions. Simon Buckby 



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mm 35 ™ 

mmm a 

Schopfner to 

Bruno SchOpfer, 42, knows his way 
around the world's great hotels, 
which perhaps helps g*pi«m why 
he has caught the eye of Baron 
August von Finck, the wealthy 
German investor who has made 
him chief executive of MOvenpick, 
the Swiss hotel and restaurant 


Von Finck bought control of 
MOvenpick in 1991 from Ueli Prager 
who had founded the company in 
Zurich in 1946. the company, wip 
of the best-known brand namag fa 
Switzerland, had been through a 
series of management changes anH 
has never lived up to expectations. 
Von Finck’s first c hoi ce of chief 
executive - Wolfgang vom Hagan _ 
was dismissed after a year and sub* 
sequently sued the group for 
breach of contract 

He was replaced by Ulrich Geiss- 
man . 55, a farmer ehtef executive of 
Lindt & Sprungli, the Swiss choco- 
late company. Although the 
group's profits have been slowly 
recovering and it resumed paying a 
dividend in 1993, its return on 
equity remains low. Freddie Hass- 
lauer, an analyst with SaL Oppen- 



V. iw. v 1 . ! !" ' 


ii « 1 1 ■ r i 1 1 1 ‘ Jfl |i > <i ■ mT’uTi I 

|. k ■ U\ 1 1 1 : r -gh »t" . : 1 iTT J 

heim in Zurich, says the group 
lacks a clear sense of direction and 
has never achieved critical mass in 
its International hotel operations. 

SchOpfer’s appointment suggests 
that MOvenpick is Intent on 
addressing the latter problem. The 
new chief executive has worked at 
the Mandarin Oriental in Manila, 
The Oriental Bangkok, London's 
Grosvenor House, the SAS Palais 
Hotel in Vienna and the 
Shangria-La Kuala Lumpur. For 
the last few months he has headed 
MOvenplck'B Asian operations in 
Hong Kong, and before that spent 
five years as operations director for 
the Mandarin Oriental Group. 

WUJSam Hall. Zurich 

Racal Electronics 
appoint Inge 

Racal, the UK-based electronics 
group, has appointed Lord Inge - 
until April the highest-serving offi- 
cer in the British armed forces - as 
a non-executive director. 

Lord Inge, 62, who was given a 
life peerage in the Queen's birth- 
day honours list in June, brings to 
Racal both his former experience 
as the senior uniformed adviser to 
the government but also a large 

network of contacts in the armed 
forces of the west and the Middle 

Defence electronics contributed 
about one-third of Racal 's turnover 
in the last financ ed year. In Sep- 
tember the group announced a 
series of defence-related contracts 
placed by the British Ministry of 
Defence, worth about £100m. The 
contracts will provide the British 
armed forces with the latest in 
information technology. Raca) is 
also a member of the Archer con- 
sortium, bidding for a £ 2 bn battle- 
field communication system for the 
British Army. 

Lord Inge had a long career in 
the armed forces before his retire- 
ment in April Commissioned into 
the Green Howards in 1956. he 
served in Hong Kong, Malaysia, 
Libya. West Germany, Northern 
Ireland and England before assum- 
ing command of Northern Army 
Group and the British Army on the 
Rhine on his promotion to general 
in 1989. 

He became Chief of the General 

Staff in 1992 and In 1994 was 
appointed Chief of the Defence 

Sir Ernest Harrison, chairman of 
Racal Electronics, said: 1 am sure 
that he will be a most valuable 

contributor to the future develop- 
ment of Racal Electronics." 

Lisa Wood. London 

Syncrude reshapes 
executive team 

Syncrude, the nsnaHian heavy oil 
consortium, has shuffled its execu- 
tive team as the group prepares to 
meet ambitious expansion targets. 

A mining operation that pro- 
duces heavy crude from Alberta’s 
oil sands. Syncrude’s production 
costs were prohibitive until recent 
developments In new technology 
and extraction techniques 
prompted the consortium to invest 

C$3.1bn in modernisation and 
expansion projects. 

With costs now under control, 
consortium members, including 
Gulf Canada Resources, Imperial 
Oil and Canadian Occidental , aim 
to boost production by 50 per cent 
by 2005. 

Syncrude, which produced crude 
at C$13. 70 per barrel in 1996, 

expects to lower costs to C$12 per 
barrel and provide a 12 per cent 
return on capital by 2000. Syncrude 
said the executive shuffle was nec- 
essary as the group moved from a 
developmental organisation to one 

that would develop technology 
while boosting crude oil produc- 

Eric Newell. Syncrude’s former 
president and current chairman 
and chief executive, has appointed 
James Carter president and chief 
operating officer to oversee all of 
the company's operations, 
research, human resources and 
support services functions. Carter 
was chief operating officer and 
vice-president of operations. 

Anthony Grace has been 
appointed executive vice-president 
for strategic projects, while Philip 
Lachambre will continue as chief 
financial officer and assume added 
responsibilities as executive 
vice-president for financial and 
legal affairs and business develop- 

The new appointees have all 
come from within the consortium, 
which, has been a leader in develop- 
ing heavy oil into an economical 
alternative to conventional crude, 
the proven reserves of which are 
dwindling in ffanptip 

Syncrude, which shipped almost 
74m barrels of oil in 1996, reported 
revenues of C$2bn and achieved an 
11.7 per cent return on capital 

Scott Morrison. Vancouver 

the aviation authority and 
chairman of Servair. 

BANK has appointed Arie 
Mientkavich chairman of its 

board. He was formerly the 
head, of Israel’s Securities 

appointed Rurik Ingram 
managing director and 
global head of fixed income 
sales. He was previously 
head of fixed income 
London, and global bead of 
sal es at BNP. 

established a principal 
finance group. It is headed 
by managing director Keith 
Howard, who has joined 
Nikko from Nomura. He is 
joined by others from 
Nomura including Tom 
O’Leary. Scott Dickens and 
Wade Newmark. 

has appointed Larry Tolpin, 
45, to the new dual role of 
worldwide creative director 
and chief executive of JWT 
West Tolpin was previously 
regional creative chairman 
of BBDO Worldwide as well 
as president and chief 
financial officer of BBDO 

■ BTR has appointed 
Pradipta Sen president BTR 
India, with effect from 
November L He will 


An an nouncement from 
United Saudi Commercial Bank. 

United Saadi Commercial Bank are 


An announcement from 
Saudi Cairo Bank. 

SjMirii farm Rank arp |JpmhH tn imnnimw 

its recent merger with United Saudi 

obligations and documentation will 

pleased tp announce its recent merger 10 recent merger wim unuea . 

r ^Sau4CaroBankWv^toirfonn Commerdal Bank. Wwiinjinfiann cut 

. omimbntinodbiJ^ international business partners that 

• a existing contractual arrangements, aD existing contractual a rr a n ge m e n ts, 

obligations and documentation will obligations and documentation will 

i wmin npacHTBE, and that the new bank . nsnam operative, and that the new baric 

HI BabffityE the lepl successor accepts lull liability as the legal 

: oE United Saudi Commercial Bank. successor of Saudi Cairo Bank. 

Sfaaiditiden have voted to cal the new bank United Sawfi Bank With a paid-up 

the 3rd largest bank in the Kingdom of Saudi Arabia, semiring over 
100,000 customers, through 85 bran c he s and 115 ATMs. The 

look forward to enjoying a long and 
prosperous future together. 

establish a BTR office in 
New Dehli. He joins from 
PowerGen International. 

■ ABB, the international 
electrical engineering 
company, has announced a 
series of senior 
appointments affecting 
country management 
positions. Michael Pohr. 
presently country manager 
Germany, has been 
appointed to a new corporate 
function for global key 
account management at the 
group's Zurich headquarters. 
As senior vice-president. 
Pohr will be responsible for 
coordinating and developing 
ABB's global key account 
concept Horst Dietz, 
country manager Korea, has 
been appointed to succeed 
Pohr. Zubir Zainai Abidin, a 
company president for the 
power transmission and 
distribution organisation in 
ABB Malaysia, has been 
appointed as country 
manager Malaysia. Alfred 
Barth vice-president at ABB 
Europe in Brussels, has been 
appointed country manag er, 
Turkey. Barth succeeds 
Anders Ericsson who is 
retiring. Frank Duggan, 
segment manager far power 
transmission and 
distribution in ABB Poland, 
has been appointed country 
manager Czech Republic. 

Duggan replaces Erik 
Fongner who will return to 

in terna ti onal Investment 
banking and securities firm, 
has expanded its European 
telecoms investment 
research team with the 
appointment of Francis 
Woollen and Deborah Collins 
from UBS. 

appointed Bertil Rydevik 
manag in g director anri 
co-head of its European 
mergers and acquisition and 
corporate finance 
businesses. Rydevik joins 
from CSFB. 

BANK, the investment 
banking arm of Australia 
and New Zealand banking 
group, has appointed Philip 
Koh director, debt 
origination, Singapore. He 
joins from Fuji B ank. 

■ Christian Elsmark has 
joined FLEMING 

product manager for 
European and emerging 
European equities. Elsmark 
was a marketing manag pr at 
Rothschild Asset 
Management in London. 

■ HUMANA has announced 
that Gregory Wolf, president 
and chief operating officer, 

is to be chief executive as of 
January 1 1998. David Jones, 
66. who co-founded the firm 
in 1961, will retire as chief 
executive hut will remain 
board chairman- Wolf will 
remain president 

RESERVES is appointing 
Terry McGibbon president 
and chief executive, effective 
November L McGibbon is 
replacing Robert Cudney 
who was filling in on an 
interim basis and who will 
remain a director. 

HOLDINGS has appointed 
Frank Sze-Bang Chao as 
chair man to succeed 
Tsong-Yea Chao, who has 
resigned. The company said 
it appointed George 
Sze-Kwong Chao as deputy 

chairman and manag in g 

director and Anthony 
Cheong-Chan Gaw and Billy 
Lee Beng Cheng as 

appointed Hans Huber chief 
operating officer, European 
operations. Huber was 
vice-president and general 
manager of Framatone 
Connectors International. 

■ Marc Vienot will retire as 
chairman and co-chief 
executive of SOCIETE 
October 31. Daniel Boulton, 

currently chief executive. 

Will become chairman an d 

chief executive of the 
company on November L 
Bouton will propose at the 
next board meeting on 
November 19 the nomination 
of Philippe Ctteme and 
Patrick Dnverger as co-chief 

has appointed Daniel 
Newman director and head 
of telecommunications/ 
media sector, Asia Pacific 
investment h anking team 
He joins from SBC Warburg. 

■ Lambert Snljders has been 
appointed vice-president and 
general manager Europe of 
SYSTEMS, the global leader 
in charge-air technology and 
a unit nf Allle dSlgnal 
Automotive. He was chief 
executive and chairman of 
the Philips group of 
companies in Indonesia. 

V . International J 
. appointments ; 

.Please fax info rmation 

on new appointments 
and retirements to 
+44171 873 3926, marked 
fear International People. ■ 

• r Set lax to line’. , 

Make a few comparisons. 
Draw your own conclusions. 


" , .'?{ ’ * .\r' 

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I SBr-W 

„ ■ M 7 - 

New Yorkers are testing a shared system, writes John Authers 

Smart card trick 

N ew Yorkers are about 
to decide whether 
smart card technology 
has any future In the 
US financial services Industry. 
After months of preparation, yes- 
terday saw the launch of the 
most ambitious smart card pilot 
sc hem e so far attempted in north 

The world’s two biggest card 
issuing associations - Visa and 
MasterCard - are involved, ainng 
with Citicorp and Chase Manhat- 
tan, the two biggest US banks, in 
an miMaiai combination erf com- 
panies that normally see them- 
selves as competitors. 

By the end of this week, more 
than 500 merchants and retail 
outlets In Manhattan's Upper 
West Side - a wealthy area sand- 
wiched between Central Park and 
the West Hudson River - will 
have been Installed with heavily 
subsidised smart card readers, 
which read Information from 
microprocessors embedded in 
plastic cards. 

Meanwhile, Chase and Citibank 
will have offered new smart 
cards to all their customers in 
the area - more than 25,000 for 
Citibank alone. Both are also 
offering “stand-alone" chip cards 
for customers of other banks. 
Each card win also function as a 

: New York's well-heeled and densely populated Upper West Side 

normal ATM card, and can be 
loaded and reloaded with cash, 
which is then deleted at point of 
sale by a merchant's smart card 

For the next six months, all the 
partners in the venture will 
closely monitor the behaviour of 
both consumers merchants. 

So win the rest of fixe payment 
card industry in the US. Accord- 
ing to Chris Tbeoharides, a con- 
sultant with Advantage Consult- 
ing and a leading expert on the 
industry: “This is a big deal. 
Since the Olympics, this is the 
first really big test of smart cards 
in the US, and the results are 
going to influence the industry 
greatly. My guess Is that if it 
b omba it win greatly hold back 
the introduction of smart cards 
in the US.” 

The main technological break- 
through under test is a common 
operating system which will 
allow each shop counter terminal 
to accept either the Visa Cash 
card or its rival from MasterCard 
Mondex - the first time a fully 
inter-operable system of 
smart card readers has been sub- 
jected to a commercial test 

The cards are not identical. 
Richard Phillimore, head of 
smart cards for MasterCard, said: 
“IPs not the case that we are 

trying to timTh* Visa and Master- 
Card inter-operable. There are 
two separate applications on the 
mwp reader. One works Visa and 
one works MasterCard.” 

He uses *ba analogy of com- 
puter operating systems- Each 
reader is loaded with two operat- 
ing systems. 

This is very different from the 
magnetic stripe environment, 
where every MasterCard begins 
with a 5. and every Visa begins 
with a 4, and the system for pro- 
cessing them at paint of sale is 
virtually identical It means that 
the two products can attempt in 
fixture to compete by offering dif- 
ferent services, such as loyalty 
programmes with individual mer- 
chants, while still using the same 
readers in each store. 

However, inter-operability 
means that West Siders holding 
either card can expect it to be 
accepted at any local merchant 

By involving two banks with 
about 50 per cent of the market 
between them in a densely popu- 
lated area, the partners hope that 
at last the cards will be widely 
used, because they will be 
accepted almost as ubiquitously 
as Visa and MasterCard magnetic 
stripe cards. 

According to Henry Uchstetn, 
head of horizon planning at Citi- 

H eat is generated 

whenever activity takes 
place, but whether tt is 
chop ping down a tree or petrol 
burning in a car engine, some of 
the energy escapes into the 
wider world as heat. 

Now researchers worldwide 
are trying to capture some of 
this heat and put it to good use. 
With the right material, the heat 
can be used to generate power 
or, paradoxically, as the cooling 
unit in a refrigerator. The 
materials in question are called 
thermoelectric, which means 
they convert heat into 

If the research aims of the 
groups working on these 
materials are fulfilled the result 
could be cars that generate all 
their electrical power from a hot 
engine block or power sources 
and refrigerators with no 
moving parts. 

Research into thennoelectrics 
was initiated in the 1820s when 
Thomas Seebeck, the German 
physicist, discovered that the 

Warming to a powerful idea 

Mark Ward on renewed interest in the potential of thennoelectrics 

voltage passing across a sample 
he was tinkering with varied 
with the temper a ture of the 
material. Since the 19th century 
thermoelectric materials have 
been widely investigated. Until 
recently the materials with the 
best thermoelectric properties 
were thought to be 
semiconductors such as bismuth 
telluride and antimony teflurlde. 

To make a r e frige rator using 
thermoelectric materials 
involves sandwiching a block of 
the compound between two 
electrodes through which a 
current was flowing. The current 
passing through the solid block 
of material causes heat to be 
transferred from one side to 
another as electrons move. 
Eventually the block ends up 
with a cool side and a hot side. 

Around 30 years ago tt was 
thought it would be possible to 
make solid state refrigerators 
this way using bismuth telluride. 
Unfortunately, fridge makers 
found it cheaper to use other 
ref riger a nts - such as CFCs. 
Despite this the materials do 
have well recognised uses in 
applications where more 
conventional cooling or power 
generation is impractical. 
Probably the most famous use 
was as power generator in Nasa 
deep space satellites such as 
Pioneer 10 and 11. 

Now worries about the 
environmental impact of CFCs 
have made people look again at 
thermoelectric materials. Also, 
novel techniques for creating 
complex crystals are making tt 
possible to create better 

thermoelectric compounds than 
those found in nature. 

Early weak on thermoelectric 
materials used only naturally 
occ ur r in g materials. Now 
scientists can make complex 
compounds as thin films or grow 
them as crystals. The techniques 
to do this, niches vapour 
deposition, did not exist or were 
too erode during the first rash of 
interest in thennoelectrics 30 
years ago. 

Gerald Mahan, a professor of 
physics at the University of 
Tennessee in Knoxville, says the 
best candidates are materials 
known as skntterndites. The 
nam e comes from Norway where 
minerals with a cubic crystalline 
structure were first found. These 
compounds are typically made 
UP of three or four dements 

rather than tim natural 
skntterndites which are typically 


The skntterndites being made 
in the laboratory exploit the 
properties of the stru ct ure of 
each crystal unit. These units are 
typically cubes with the rare 
earth part of the compound 
rattling around inside, soaking 
up thermal energy and giving 
them good thermoelectric 

Exactly how skntterndites 
translate heat into power is still 
being investigated. Prof Mahan 
says prototype devices using 
these exotic compounds are 
already being made and could be 
in homes within five years. 

Another good candidate for 
making thermoelectric 
refri g eration materials is to nse 

bank: “We need critical mass. 
You need a critical mass of mer- 
chants offering point-of-sale ter- 
minals. And you also need a criti- 
cal throb of consumers with the 
card in their pocket If Chase and 
Citibank were to try to promote a 
proprietary product it would be 
much more difficult to get criti- 
cal mass. Instead, inter-operabil- 
ity f mt|S consumers are less 
hesitant, and merchants need 
only one terminal on their 

' Smart cards are already com- 
mon in Europe. But take-up in 
the US has been poor, and the 
last big smart card pilot, run by 
Visa with a consortium of three 
local banks at the Olympics last 
year in Atlanta, was generally 
regarded as a failure. 

Michael Smith, general man- 
ager of Schlumbarger Danyi, 
which is manufacturing the hard- 
ware, says the Atlanta project 
failed In part because the cards 
were offered for fixed denomina- 
tions and were disposable. There 
was no chance to reload the 
cards with cash, as there will be 
in New York. Also, Atlanta is far 
less densely populated than New 
York, making the cards less con- 
venient for consumers. 

There are good reasons why 
chip cards have been slow to take 

off in the US. Telecauunuhica- 
tions are plentiful ..and cheap, 
maMng it quick and sJmpk .to 
verify transactions made vrith^a 
magnetic stripe. Credit cards 
made much faster progress in the 
US so that the complete infra- 
structure for magnetic stripe 
cards was already in place before 
smart cards be came v iable. ... 

Why should smart cards, take 
off now? According to Mr Smith, 
speed is important. “The advan- 
tage with this system is that you 
can store the money hr the card " 
1 so that the transaction calx, take 
. place between the terminal and 
the card without having to -make 
any telephone calls- There a re 
fewer steps, so itvshpuld be 
quicker." \ . 

Ronald Braco, m charge of tin 
project for Chase, -adds that 
smart card transaction are anon- 
ymous. and that tbejrcah be. 
made for very small- amounts. 

Where will the project move 
once the first six months are up? 
Mr Phillimore has banned fixe 
word •‘pilot” from, office. As far 
as he is concerned, thee Upper 
West Side is “the first phaseofa 

Others are more prepared to 
describe the pilot as a six-month 
experiment, although they are 
plainly expecting to ."expand 
sooner rather than later into the 
rest of metropolitan New York. 

According to Mr - BraCo, . diree- - 
tor responsible for chip cards at 
Chase: “We've invested heavily 
In infrastructure which is rpfl-out . 
strength. The process "we_ have 
built in the' hank to issue ihe ' 
cards is fully integrated into our 
total systems Infrastructure" 

’ 'Seine* Photo liny . 

Pioneer 10/11 spacecraft: thermoelectric generato r ! euppBed electricity 

semiconductor-sand make them 
trap heat in quantum wells. A 
quantum well is a tiny cavity 
several nanometres wide that 
can trap electrons that do not 
have enough energy to escape 
into the layers of material above 
and below the hole. Trapped 
electrons mean trapped heat and 
a cooling effect 

The big drawback to this \ 
approach is that it 'may take : ■' / 
thousands of quantum wells to 
produce a good refrigerator. ' 
Making chips with so many - 
quantum wells may prove costly 
and difficult to acqpmplislL;- 

Mark Ward writes for the New 




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William Packer changes his 
mind about Gilbert & George 

T he Young British 
Artists of Sensa- 
tion may be our 
flavour of the 
1990s, but for 20 
years or more Gilbert & 
George have been, to the 
taste-buds of the world at 
large, the truer flavour of 
the British avant-garde. 
They are, from Beijing to 
Baltimore, the best known 
British artists of their gener- 
ation. Often scatological In 
reference and in-your-face in 
presentation, their work still 
retains its capacity to shock, 
if shock is what you want 
Even so, their retrospec- 
tive - spanning 30 years - at 
the Mus£e d’Art Moderae is 
their first show in Paris on 
so large a scale since 1981, 
and the first in easy reach of 
London in almost as long. 

Here Z must admit that I 
have long found Gilbert & 
George - In- their joint per- 
sona as their own work, 
image and object living 
sculpture - tiresome, 
affected and fbrmiilaic. After 
ail bven the nicest conceit 
. like a goad joke, is inclined 
to lose its edge with endless 
repetition. Yet sheer persis- 
tence commands some 
respect in the end. Is it just 
me that has changed, or has 
the work of G. & G. indeed 
grown more .resolved, mom 
interesting, more of a piece 
than ' once it seemed? 

Without abandoning all 
my reservations, I have to 
say that I found this exhibi- 
tion much more engaging 
than I had feared, much wit- 
tier in general, much less 

shocking in particular. As 
for the turds, the private 
parts and obscene graffiti, 
they now occupy Car less a 
place within the context of 
the entire oeuvre than noto- 
riety suggests. Their formal 
pictorial disposition, cool 
and objective, is now rather 
more evident than any lit- 
eral reading. In this connec- 
tion, the poet and artist 
David Jones remarks that in 
the use of “efficacious 
words" during the Great 
War, “the ‘Bugger! Bugger 1 
of a man detailed, had often 
about tt the ‘Fiat! Fiat’ of the 

G ilbert, from 
Italy, and 
George, from 
Devon met as 
students at 
Saint Martin's School of Art 
in the late 1960s. The sculp- 
ture department there under 
Anthony Caro was then both 
the leading abstract school 
in the country and the focus 
for the conceptual reaction 
against the idea of the con- 
ventional sculptural object 
In 1969, G. & G. declared 
themselves "A Singing 
Sculpture” , painting them- 
selves gold to sing "Under- 
neath the Arches" in 
mechanical repetition for 
hours on end. But even this 
soon seemed too specific for 
artists whose every waking 
and sleeping moment as "liv- 
ing art” was particular and 
significant. And so, under 
the banner of "Art for All", 
they began to issue pern* 
phlets and propositions that 

- - v 

m . .w 

. -- ' ’ ’■ . _ *; 

A permanent visual statement of their dally life: ‘Light Headed’, 1991, by Gilbert & George 

took the idea of the being, 
the living of art, to the 
reader himself, cast in lan- 
guage often innocently redo- 
lent of the fm-de-siecle deca- 
dence - “Oh Art, what are 
you? You are so strong and 
powerful, so beautiful and 
moving . . . Why do you have 
so many feces and voices? 
You make us thirst for you 
and then run from you . . . 
One day we thought we saw 
you in a crowded street . . . 
To be with Art is all we 

But this again proved to 
be not quite enough. Ironi- 
cally. even they, so adamant 
against the self-sufficient 

work of art. cut off from life, 
as they saw it, in its her- 
metic culture-bubble, began 
to feel the need to make a 
visual and permanent state- 
ment of some kind. Their 
daily life was still tbeir 
essential subject, but they 
turned first to drawing and 
then to photography as the 
means to fix it They drew 
themselves in an idealised 
countryside, or drinking in 
the bar. drawings that were 
all encompassing, covering 
every surface, fragile and 
ephemeral. Then they turned 
to photography, fragmentary 
snapshots scattered Judi- 
ciously across the wall, see- 

ing themselves in the coun- 
try, in the bar, getting 
drunk, through a glass 

This general sense of 
experiment and adventure 
remained until, in the mid- 
1970s, they hit upon the fron- 
tal. rectilinear formula 
which has sustained them 
ever since. There is the grid 
of photographs, at first inte- 
gral images in, black and 
white, arranged symmetri- 
cally and selectively overlaid 
in red. The early series, 
“Dead Boards”, with the two 
figures in an empty, hare- 
floored and panelled room, 
has a monumental simplicity 

and authority, and subjec- 
tive ambiguity, tbat together 
set the measure for all that 
is to come. 

What does come is an 
increasing range of bright, 
clean colour, imagery tbat 
tr an sgresses more and more 
the defining grid, a scale 
that moves only from large 
to huge, and content that is 
ever more blatant, pictori- 
ally aggressive and at times 
equivocally polemical. This 
all seems to me a pity, but 
not because of the qualities 
of individual works, which 
in themselves are sophisti- 
cated and often elegant com- 
positions. wryly clever in 

their play with reference and 
image, and immaculately 
presented. Rather it is 
because this show r emin ds 
us how various our Living 
Sculptors once were, and 
bow far and quickly they 
developed in their first ten 
years together. They have 
been hang in g one big drum 
now for quite a while. There 
is a place too. perhaps, for 
their old penny whistle, deli- 
cately played. 

Gilbert & George: Mus6e 
d’Art Moderae de la Vflle de 
Paris, 11 avenue da Presi- 
dent Wilson, Paris 16, until 
January 4. 

W hether or not 
the four mature 
symphonies of 

S chumann st£Q 
fell into the category of the 
lesser-known or undervalued 
is debatable. I would have 
thought that , thanks to the 
rediscovery of 19th-century 
orchestral colours, the com- 
poser's abilities -In the 
departments of instrumenta- 
tion and large-scale form 
could not be reasonably 
questioned. But John Eliot 
Gardiner clearly believes 
that there is still some evan- 
gelising to be done, from his 
introduction in the pro- 
gramme book for the second, 
aut umn instalment - three 
orchestral concerts, a cham- 
ber recital, and the usual 
satellite .events.- of Schu- 
mann Revealed at the Barbi- 
can HaLU Londm ECS. 

Gardiner's readings did 
indeed present revelations. 
On Friday the Orchestra 
Revolutiozmalre et Romanti- 
que gave the Second Sym- 
phony with a swagger, seem- 
ingly investing-in the piece 
every ounce- of energy that 
they could muster. Exactly 
how much Gardiner's insis- 
tence that his violins and 
violas stand up. in the old 
Leipzig tradition, contrib- 
uted to. its flavour we cannot 
know, but If banging them, 
from the rafters in Batman 
suits gave results like these I 
would be all for it. Schu- . 
inarm emerged unexpectedly 

Concerts/Stephen Pettitt 



as a latter-day Haydn, jnst as 
adept as the older composer 
at thrilling us with outra- 
gous sequential chains and 
shocking harmonic lurches, 
or witty exchanges between 
different instruments and 
register of theme or half- 

The next evening the ORR 
showed other sides of 
Haydn’s influence in the glo- 
riously noble, majestic and 
invigorating arch of the 
Third Symphony - the 
“Rhenish" - and in their 
potentially suici dally fast 
account of the Konzerstuck 
for four horns (Roger Mont- 
gomery, Susan Dent, Gavin 
Edwards and Robert Mas- 
kell) and orchestra - a play- 
ful challenge to virtuoso 
players if ever there was.- 

But Schumann had to 
work hard to reach the 
assured maturity of 'the 
"Rhenish". Just how ha rd 
was- revealed in the' two 
movements of the aborted 
Zwickau Symphony. Op 7, 
composed in 1833. Awkward 
in shape and sometimes 
self-conscious In idea - redo- 
lent of Berlioz’s boldness but 

without that composer's 
sense of certainty - this 
piece's presence in the week- 
end's mvestigatlon-come-cel- 
ebration was welcome, like 
the intrigue of an early 
effort by a master painter at 
a major retrospective. The 
idea of concert as the musi- 
cal equivalent of an art exhi- 
bition seems a good one. 

E lsewhere in the 
weekend's pro- 
grammes, Steven 
Isserlis's trance-Ilke, 
beautifully coloured perfor- 
mance of the CeDo Concerto 
of 1850 (again hardly a rar- 
ity) and Robert Levin’s flam- 
boyant reading, on a satin- 
sounding piano of the 
period, of the Introduction 
and Allegro for piano and 
orchestra of 1853 negated 
thoughts of Haydn and 
reminded us that Schumann 
was the quintessential 

The literary aspects of that 
Romanticism were explored 
In the last concert which at 
last really did reveal a less- 
er-known side of the com- 
poser, with three late-ish 



Hot Muadektheater 

Tel: 31-20-551 8911 
La Travlata: by Verdi. 

Netherlands Opera revival of a 
staging by Alfred Khchner,. 
conducted by Ralf Weikert; 

Oct 7, 10 



Konzertftaus Tel: 49-30-203090 
Berlin Symphony Orchestra: 
conducted by John Carewe in 
works by Schubert and Liszt 
With the Ernst Senff Chor and 
baritone Siegfried Lorenz; Oct 10 


Deutsche Oper 
Tel: 49-30-34384-01 

• Der Fliegende Hollander: by 
Wagner. Conducted by Christian 
Thielemann in a staging by Gfitz 
Friedrich; Oct 8 

• Der Prinz von Horn burg: by 
Henze. Conducted by Christian 
Thielemann in a staging by G6tz 

. FMedrtehfiOaffclQ-r-;: 

' • Dte.Zaefeerftotik fryiMbzart 
Staged by GEfrfter ; Kran«'i with 
sets and costumes fr/Andreasr 
- Reinhardt; Oct 7 • * 

• Madame Butterfly: by Puccini. 
Staged by Pier Luigi Samaritan!; 
Oct 9 .’ 



Kunst-und AussteUungshaBe 
der Bundesrepubfik 
Teh 49-228-917 1200 
KunsthalJe Bremen: selection of 
Important works including 
paintings, sculptures and copper 
engravings from the collection of 
the Kunsthalle Bremen. Ranges 
from 17th century Dutch painting 
to modem photography; to 
Jan 11 



La Mormaie Tel: 32-2-229 1211 
Otello: by Verdi. New production 
conducted by Antonio Pappano 
In a staging by Willy Decker. 

Cast includes Susan Chiteott as 
Desdemona; Oct 8 



Lyric Opera of Chicago 
Tel: 1-312-332 2244 

• Nabucco: by Verdi. NOW 
production staged by Sljah 
Moshlnsky and conducted by 
Bruno Bartotetti. Cast includes 
Maria Guleghina and Samuel 
Ramey; Oct 8 

• Peter Grimes: by Britten- 

choral works and some of 
the incidental music for 
Byron's Manfred, composed 
in 1848, culminating in a 
touching choral requiem. 

Manfred’s exquisitely man- 
ufactured miniatures were 
followed by Nachtlied, in 
which Schumann lavishes 
upon words by Friedrich 
Hebbel music as beautiful as 
anything he ever wrote. In 
the opulence of this piece 
there are hints of the 
Brahms to come, just as in 
“Scenes from Goethe's 
Faust”, with whose third 
part the weekend culmi- 
nated, Schumann strikingly 
points the way to the tran- 
scendent visions of Mahler’s 
Eighth Symphony. Schu- 
mann’s biographer Joan 
ChisseH was right to lavish 
praise on the final “Chorus 
Mysticus” as something tbat 
reaches far beyond the com- 
poser's own emotions. It is 
tragic that such a work 
should be better known by 
repute than experience. The 
soloists Ruth Ziesak. Nadja 
Michael, Toby Spence. Wil- 
liam Dazeley and the splen- 
did Neal Davies relished the 
composer's glorious visions 
of a world beyond; then, in 
the equally beautiful but 
more concise Requiem fur 
Migrum of 1849, the excellent 
Monteverdi Choir was joined 
by a dozen cherubic voices 
from the Hanover Boys' 
Choir, showing musicianship 
far beyond their years. 

Conducted by Mark Elder, 7, 8, 9, 10 

making his Lyric Opera debut in £ ■ 
a staging by John Copley. Ben .-*■ OPERA 

BaUet/CIement Crisp 

'Giselle' in jackboots 

T he idea that works 
of art from the past 
must be made “rele- 
vant to today's audi- 
ence" is a canard. It is one 
which has gained too much 
credence in the ballet-world 
of recent years. On all sides 
we can find a garishly mod- 
ernised Nutcracker, a crassly 
misrepresented Sleeping 
Beauty , a riot of Swan Lakes 
notable for tbeir lack of 
grace or credibility. Every- 
where the old ballets are 
betrayed, and yet when well 
danced, there is nothing dif- 
ficult for an audience about 
these “classics" - tu tradi- 
tional form. The fact -that . 
companies are unable to 
field dancers fit to perform 
them helps explain the revi- 
sionist tendency: if you can’t 
dance them, traduce them. 
“Relevance" has nothing to - 
do with up-dating of the 
action, but a great deal to do •" 
with encouraging dancers to 
learn bow to interpret the 
great repertory. The need for 
companies to venture 
beyond a narrow, safe little 
enclave of box-office titles is 
another and closely-related 

Which said, we find a new 
Giselle from Northern Ballet 
Theatre, receiving its first 

performance last week at the 
Sheffield Lyceum. Christo- 
pher Gable, notable dancer 
and actor, has spent the past 
decade guiding his company 
along the difficult path of 
dance drama. Despite my 
reservations about certain of 
his stagings, be has forged 
an expressive ensemble 
which pleases a public eager 
for NBTs brand of theatri- 
cality. Hxe new Giselle is a 
continuation of the manner. 
Set in a war-time ghetto, 
with Albrecht as an SS 
trooper felling for a waif-like 
ghetto-child and haunted in 
the second act by ghosts of 
his victims, it is brilliantly 
designed by Lez Brothers ton. 
whose evocation of Warsaw 
in 1940 is terrifying. 

A dam's score is 
edited, re-worked as 
to orchestration, 
and exists as doubt- 
ful basis for fragments of the 
traditional choreography, 
which sit quite as uneasily 
with the modernities of the 
action. The adaptation is 
ingenious - Albrecht's SS 
uniform and pistol are dis- 
covered when ghetto chil- 
dren parade in them- - and 
the ensemble playing is fine. 
The influence of Schindler's 

List and Mats Ek's revision- 
ist and hateful Giselle, which 
took place in a madhouse 
and nearly drove me to one. 
is to be felt. - - 

On immediate terms. I 
accept this staging for what 
it is. It may not Impress me 
as a way of making audi- 
ences understand Giselle, 
which is a masterpiece of 
Romantic theatre uniquely 
of its time, but it is credible 
enough, provided you do not 
seek the Perrot/Petipa text 
on any serious terms, and it 
benefits from responsive 
ensemble playing. Jayne 
Regan is very touching as 
the ghetto-Giselle; Denis 
Mattnklne does what he can 
as her jackbooted lover, but 
the role is shadowy. My 
doubts have more to do with 
Gable's decision to link tt to 
the Warsaw ghetto and the 
plight of those millions who 
suffered and died at the 
hands of the Nazis. The stag- 
ing. despite its programme i 
claim to be set in “an urban . 
ghetto in a war-tom coun- 
try". battens on something 
too appalling to contemplate 
in this way. - , 

Northern _ Ballet Theatre’s 
national torn; is sponsored 
by the Halifax. . 





O n this page 
recently Alastair 
described the 
modern musical as “the 
cesspit of theatre today”. 
How cheering it might be to 
report an exception to the 
rule. Sadly, Dorian offers no 
such opportunity. David 
Reeves’ musical adaptation 
of The Picture of Dorian 
Gray is clearly a labour of 

love, but all the endeavour 
in the world cannot save it 
from a suffocating banality. 
Oscar Wilde’s story of the 
young aesthete whose por- 
trait grows old and decadent 
while he remains pristine 
emerges here as a flat, fatu- 
ous piece of writing with no 
subtlety, depth or wit what- 

Dorian is a through-sung 
musical. When not chanting 
through basic wooden dia- 
logue, the actors are tossed 
on a sea of plaintive solos 
and mawkish duets. The pia- 
no-driven score favonrs 
music-hall or silent-movie 
style - repeated churning 
chords, mounting hysteria 
and more peaks than the 
Andes. This may be an 
intentional pastiche, bnt it 
soon becomes wearisome, if 
not embarrassing. The lyr- 
ics, meanwhile, begin with 
the besotted painter Basil 
Hall ward hymning Dorian's 
cheekbones and go downhill 
from there. 

Bruno Santini provides a 
handsome set, with its 
grand, fractured picture 
frame, and director Mehmet 
Ergen moves the cast 
around energetically, bat 
his production too often 
fells foul of stagey gestures. 
Again, this might be ironic, 
but If so tt rather backfires. 
One feels sorry for the cast, 
not least because several of 
them are uncertain singers, 
including Marcello Walton 
as Dorian. He has a hand- 
some profile and gamely 
strikes attitudes, bnt this 
doesn’t quite cut the mus- 
tard somehow. 

There are a couple of 
bright spots. Nicholas 
Pound brings a certain dig- 
nity and roguish charisma 
to the amoral Lord Henry 
Wotton, and Eliza Lomley 
has a captivating presence 
and a sweet voice as Sybil, 
the actress whom Dorian 
betrays. Reeves also gives 
her a rather lovely tune. 

You could not accuse 
Reeves of lack of effort: he 
endlessly reprises and ech- 
oes earlier motifs and he 
arranges complicated paral- 
lel scenes. Unfortunately 
during the latter you cannot 
hear what anyone is sing- 
ing, with the result that the 
cast belt it out for all they 
are worth, leaving the audi- 
ence sinking' under the 
onslaught of decibels. To 

crown it afl, the evening I 
was there, the ending, with 
Dorian destroying the paint- 
ing that has ruined his life, 
was so clumsily executed by 
all concerned that the audi- 
ence did not even realise it 
had finished. Not a mistake 
you feel Wilde would have 

’ Sarah Hemming 

Ails .Theatre, London WC2, 
to November 1 (0171-886 
5182 .. . 

Heppner sings the tide role; 
Oct 9 



Kim bell Art Museum 

Tel: 1-817-332 8451 ..- r" 

Impressionist and Modem 
Masterpieces: The Rudolf 
Staecheiin Family Foundation 
Collection of Basel. First 
American showing of 26 
paintings including Gauguin's 
. Nafea Faa Ipoipo (When Will You 
Marry?}, and works by Cezanne, 
Matisse and Picasso; to Jan 11 

Barbican Centra 
Tel: 44-171-638 8891 
London Symphony Orchestra: 
conducted by Mark Wigglesworth 
in works by Anna Akhmatova and 
Shostakovich; Oct 9 

Royal Festival HaB 
Tel: 44-171-928 8800 
World Piano Competition: 
afternoon and evening recitals by 
competitors in the Purcell Room, 
Sep 28 to Oct 5. The Grand Final 
is on Oct 7, write tee 
Phiiharmonia Orchestra 
conducted by Alexander 
Sanderfing, in the Festival Hall 


Labatfs Apollo, Hammersmith 
Tel: 44-171-416 6082 
The Royal Ballet Giselle. 
Production by Peter Wright; Oct 

.. : .Barbican Theatre 
. .f. ^0^:44,-171 -638 8891 
'wmm '■•..The' Royal Opera: Platfee, by 
Rameau. New production 
' • '• ^ ' directed and choreographed by 
'Mark 1 Morris* conducted by 
m, ' i: NJcbolas.Mtfeegan,'- Oct 7, 10 
r"T# The Royal Opera: The Turn of 
tee Screw, by Britten: Colin 
Davis conducts a new production 
directed by Deborah Warner. 

Cast includes Ian Bostridge; 

Oct 8, 9 



Dorothy Chandler Pavilion 

Td: 1-213-365 3500 
Los Angeles Philharmonic: 
conducted by Esa-Pekka 
Salonen in works by Copland, 
Rachmaninov and Sibelius. With 
piano soloist Yefim Bronfman; 
Oct 9, 10 


L A. Opera, Dorothy Chandler 
PaviOon Tel; 1-213-972 8001 
Horen da en el Amazonas: by 
Daniel Cabin. Conducted by 
Roderick Brydon in a staging by 
Francesca Zambeilo. Cast 
includes Sheri Greenawakf; Oct 7 


Bayerische Staatsoper 
Tel: 49-89-2185 1920 
Bayerischen Staatsorchesters: in 
Walter Haupt’s Requiem. 
Conducted by Peter Schneider. 
With soprano Angela-Maria Blast 

and baritone Bke Wilrri Schulte; 
Oct 7 

Ptiflharmonie Gasteig 
Tel: 49-89-5481 8181 
Montblanc Phiiharmonia der 
Nationen: conducted by Justus 
Frantz in works by Mendelssohn, 
Brahms and Schubert With violin 
soloist Koh-Gabriel Kameda and 
cellist Claudio Bhorquez; Oct 7 


Bayerische Staatsoper 
Tel: 49-69-2185 1920 

• Aida: by Verdi. Conducted by 
Roberto Abbado in a staging by 
David Pountney; Oct 10 

• Le Nozze de Figaro; by 
Mozart Conducted by Peter 
Schneider in a staging by Dieter 
Dom. Cast includes Amanda 
Roocroft and Alison HagJey; 

Oct 8 • 

• Peter Grimes: by Britten. 
Conducted by Jun M&rkl in a 
production directed by Tim 
Albery. The title role is sung by 
Philip Lang ridge; Oct 9 


Lincoln Center 
Tel: 1-212-721 6500 
New York Philharmonic: 
conducted by Kurt Masur in 
works by Mozart and Franck. 

With pianist Helen Huang and 
New York Choral Artists directed 
by Joseph Rummerfelt; Avery 
Fisher Hall; Oct 8, 9, 10 


Metropolitan Opera, Ltecoh 
Center Tel: 1-212-362 6000 

• Man on: by Massenet Revival 

of a staging by Jean -Pierre 
Ponneiie; Oct 8 

• Tu ran dot: by Puccini. Revival 
of a staging by Franco Zeffirelli; 
Oct 7 

New York State Theater 
Tel: 1-212-870 5570 
The Magic Flute: by Mozart New 
York Cfty Opera revival. 
Conducted tty Derrick Inouye in a 
staging by Lotfi Mansouri; Oct 8 



Musee if Art Mod erne, Ville de 
Parte Tel: 33-1-5387 4000 
Gilbert & George: major 
retrospective of tee British 
artists, comprising some 120 
works and spanning their career 
from their meeting at SL Martin's 
School of Art in 1968 to the 
“Fundamental Pictures" of last 
year; to Jan 4 

Mus£e du Louvre 
Tel: 33-1-4020 5151 
A Mission to Persia 1897-1912: 
display of pictures, objects and 
photographs retracing the 
archaeological expedition led by 
Jacques de Morgan, paying 
tribute to his career and the 
mission's discoveries about the 
ancient civilizations of Iran; to 
Jan 5 


Op6ra National de Paris, Opera 
Bastille Tel: 33-1-44731300 
9 Aufstieg und Fall der Stadt 
Mahagonny: by Kurt Weill. 
Conducted by Jeffrey Tate in a 
production directed by Graham 
Vick; Oct 8 

♦ Le Nozze di Figaro: by 
Mozart Conducted by James 
Con Ion In a staging by Giorgio 
Strehler. Cast includes Anthony 
Michaels -Moore; Oct 9 

• Turandot by Puccini. New 
production by Francesca 
Zambeilo. Conducted by 
Georges Pr£tre. With designs by 
Alison Chitty; Oct 7, 10 

Opera National de Paris, Palais 
Gamier Tel: 33-1-43439696 
Pel teas et MgJisande: by 
Debussy. Conducted by James 
Conlon in a staging by Robert 
Wilson. Cast includes Dawn 
Upshaw; Oct 8 


BBC World Service radio for 
Europe can be received in 
western Europe on medium wave 
648 kHZ (463m) 


Monday to Friday, Central 
European Time; 

• NBC/Super Channel 

07.00: FT Business Morning 
10.00: European Money Wheel 
Nonstop live coverage until 15.00 
of European business and the 
financial markets. 

17.30: Financial Times Business 


0&30: Squawk Box ■ 

10.00: European Money Wheel 
18.00: Financial Times Business 





Martin Wolf 

“Then is no cause Jar worry. 
The high tide of prosperity 
will continue.'’ Andrew W 
Mellon, 1328. 

Andrew Mellon, one of the 
great financiers of Us era, 
had no doubts. Neither did 
US president Calvin Cool- 
idge, who told Congress at 
the beginning of 1928 that 
they and the country “might 
regard the present with sat- 
isfaction and anticipate the 
future with optimism”. 
These views were the con- 
ventional wisdom of their 
day. They proved horribly 
wrong, all the same, when 
the stock market collapsed. 
Today, with a bull market 
longer and stronger than 
that of the Roaring 1920s, 
the question most be 
whether so resounding a 
crash could happen a gain 

The coming loth anniver- 
sary of Black Monday on 
October 19 can only sharpen 
anxiety. Between September 
and November 1987, the 
Dow Jozies Industrial Aver- 
age lost 29 per cent of its 
value, much of this on Octo- 
ber 19, when it fell 23 per 
cent As the chart shows, 
the rise in the index since 
1994 shows a remarkable 
parallel with what happened 
in the three years before the 
crash of 1987. 

A deep bear market in the 
US must be the biggest 
threat to today’s bright pic- 
ture of more widely shared 
economic growth. Yet in its 
latest World Economic Out- 
look. the International Mon- 
etary Fund merely men- 
tioned - rather than 
stressed - this concern. 

One reason for such 
insouciance could well be 
what happened after the 
1987 crash. The Dow recov- 
ered its pre-crash levels by 
the second half of 1989- 
Since then it lias risen more 
than 200 per cent in n ominal 
terms. Standard & Poor's 
Composite Index is also up 
some 200 per cent over pre- 
crash levels. In retrospect 
the dramatic events of a 
decade ago were but a brief 
hiatus in the bull market of 

1929 and all that 

As the 10th anniversary of Black Monday nears, it is tempting to ask 
whether today* s unprecedented bull market is heading for another crash 

the past one and a half 
decades - a period when 
real returns on holdings of 
US equities have been 
roughly double their long- 
run average of 6.6 per cent 

On a number of standard 
measures, US equities were 
about as cheap in the early 
1980s as at any time since 
the early 1920s. There was 
room for a massive recov- 
ery. When it came, it gener- 
ated correspondingly huge 
returns on equity invest- 
ments. Over time, such 
returns have come to seem 
normal. This h»g encour- 
aged more buying of shares, 
pushing values up further. 
Equity investment is now 
widely seen as offering a 
guaranteed path to ever- 
greater wealth. 

This is how markets come 
to blow bubbles. Standard 
indicators suggest that Wall 
Street is indeed overvalued. 
At such times, it is also 
standard behaviour to argue 
that standard indicators are 


On Standard & Poor’s 
Composite Index, the divi- 
dend yield is down to 1.6 per 
cent. This is roughly half 
what it was in the 1960s and 
also less than half what it 
was in the early 1990s. But 
the dividend yield is not a 
fundamental indicator of 

value. The price-earnings 
ratio is far more suggestive. 

According to Professor 
Jeremy Siegel of the Whar- 
ton School, between 1871 
and 1992 the price-earnings 
ratio averaged 13.7. Now it 
is a little under 24, dose to 
an all-time high. Even in 
October 1987. it was only 22. 
Over the past 120 years the 
price-earnings ratio has 
oscillated between euphoric 
peaks of about 25 and 
depressed troughs of not 
much above 5. Ultimately it 
has reverted to mean. 

The only year since the 
second world war when the 
price-earnings ratio was 
hi g her than at present was 
1992. That was the begin- 
ning of the cyclical recov- 
ery, when tlie share of cor- 
porate profits in gross 
domestic product briefly 
dropped to 6 per cent. By 
the second quarter of this 
year, the share was close to 
10 per cent. This is not as 
high as in the mid-1960s 
when it reached 12 per cent, 
blit well above its trough. 
The real return on corporate 
equity, back at over 8 per 
cent, is also up to levels not 
seen since the mid-1960s. 

Combined with economic 
growth r unning at around 3 
per emit, the recovery in the 
share of profits in GDP has 

Echoes of crashes past . v 

Dow Jones tndustrfaj Average (Indices rebased) 
23 0 — 

sol 4. 

— — 1*» ■ . • •• 27 fcf-vV* 28 

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87 . 88 

Sr ; s; 

• • ’• •' 

generated growth in profits 
of 10 per cent a year in real 
terms since 1992. This recov- 
ery has underpinned the 
stock market surge. Yet for 
anything like this to con- 
tinue over the next five 
years, the share of profits in 
GDP must reach unprece- 
dented levels. 

Another mean -reverting 
series is the valuation ratio 
- or “Tobin’s Q", after the 
Nobel-laureate James Tobin 
of Yale University. This 
measures the ratio of 
stock market value to the 
net assets of companies, at 
replacement cost When the 
ratio is low it is cheaper to 
buy companies on the floor 
of the stock exchange than 
to make investments. When 
it is high, the reverse is 
true. A symptom of a high 
valuation ratio is strong 
investment. This is pre- 
cisely what is to be seen, 
with growth in private nan- 
residential fixed investment 
of 8J> per cent a year since 
the second quarter of 1992. 

Among the analysts th** 
have placed particular 
weight on the valuation 
ratio is Smifhers & Co, a 
London-based investment 
adviser. Using a series pro- 
duced by the Federal 
Reserve, recently revised to 
give lower values for the lat- 
est years, it points out that 
the market is currently at 
close to 130 per cent of 
underlying corporate net 
worth. This is Higher than 
at any time since 1920, dou- 
ble its long-run average and 
about three times higher 
than a decade ago. 

Copious efforts have been 
made to argue the message 
of the valuation ratio away. 
It is suggested, for example, 
that economic growth - and 
so returns on capital - will 
be higher than previously or 
that intangible assets are 
more important than before. 
Neither of these arguments 
is compelling. 

No thing , for example, sug- 
gests that the underlying 
growth rate of the US econ- 
omy is faster than in the 
1960s. And if it were, it 

should not alter this ratio. 
Moreover, even if intangible 
assets have become more 
important, the effect should 
have been an upward drift 
in the ratio over a long 
period. This has not hap- 
pened. Instead, there has 
been a big revaluation since 
the start of the 1990s. Ana- 
lysts who argue that present 
valuations are right must 
believe the market was dra- 
matically wrong for two 
decades. Why should one 
accept the market is more 
reliable now, at historically 
stretched valuations, than 
when they were far lower? 

There are two possible 
responses. One is that his- 
toric benchmarks are now 
irrelevant The justification 
would be a glorious trans- 
formation in the US econ- 
omy - for which there is 
virtually no evidence. This 
would then be a brave new 
world. The other view is 
that present valuations are 
hugely exaggerated. If so. 

this would not be the first 
time recovery from 
depressed values has gener- 
ated an overshoot in market 
valuations of the underlying 
earnings and assets. 

This is not a forecast ft is 
an observation. What it does 
do. however, is indicate the 
nature of the risks. Current 
valuations do not mean the 
market will collapse tomor- 
row. next week or next year. 
Bat the probability that 
market valuations will 
halve over the next several 
years must vastly exceed 
the c hanc e that they are 
about to double. 

Indeed, if history is a 
guide, such a highly valued 
market could tumble a long 
way. A fall of two-thirds 
would not be unprece- 
dented. Impossible? Hardly. 
It may need only a brisk rise 
in inflation and a corre- 
spondingly strong response 
from the Federal Reserve to 
trigger the change in mood. 
Mellon was wrong. Will 
today's Wall Street geniuses 
prove any wiser? 


EU is at risk of over-selling 
the euro to Asian investors 

From Dr Jurgen DnymaUa. 

Sir, In your article 
"Europe takes its new cur- 
rency to the marketplace” 
(September 30). you describe 
the efforts of Yves-Thibault 
de Sfiguy, the EU commis- 
sioner responsible for lifting 
the euro’s profile interna- 
tionally, to sell the euro to 
investors in Asia. 

In my opinion, Asian 
investors, with their feeling 
for commercial realism, will 
remain sceptical about the 
new European currency. 
Joseph Yam, president of the 
Hong Song Monetary 
Authority, is completely 
right In his opinion that the 

euro hag first to show it is a 
robust currency. 

This is a rational attitude. 
The euro does not yet have a 
history, the whole proj- 
ect is regarded as a big his-. 

experiment - it may 
succeed, but it also may ML 
Mr Yam is not alone in his 
view, it is also the opinion of 
many people in Germany, 
Sweden and other European 

And selling the euro as a 
fact Is risky since discussion 
about the possible postpone- 
ment of its introduction is 
t akfog place in Europe. Kurt 
Biedenkopf, file prime minis- 
ter of Sax ony , made it clear 

in an interview that the final 
decision on EXnn - when it . 
will start and how many 
countries will partknpate in 
the first wave -wfilbemade 
next spring. Until toen ail . 
forecasts that the euro will 
or will not be introduced are 
just speculation - or hope. 

ft would be fair if Mr Si- 
guy explained this also . to 
Asian investors. Otherwise, ; 
if the euro is not launched ' 
cm schedule, he might lose • 
all his credibility. 

JOrgen DrayntaUa, 
Saariauterner Str.18, 1:. . 
51375 Leverkusen* 


Pinochet due credit for Chile’s success 

From Miguel A. Solan. 

Sir, 1 read Imogen Mark's 
article, “Pinochet’s passing 
out parade” (September 20/ 
21) with great interest. It 
showed that in this era of 
the politicafiy-carrect hypoc- 
risy there are some journal- 
ists and newspa p er s ready 
and willing to write a non- 
partisan and unbiased 

There is no denying that 
abuses and reproachable 
actions took place during 
Pinochet’s administration. 
Can we categorically affirm 
that they were Pinochet's 
own orders? And can we 

attest that other actions as 
reproachable as those did 
not take place in the bistcay 
of Chile? What we really can 
affirm is that because of his 
administration, Chile has 
become an exporter with 
unsurpassed marketing and 
world-wide reach. 

Of course, this Interna- 
tional success cannot con- 
done the “disappeared”. But 
why use Pinochet as a sacri- 
ficial lamb on whom to heap 
blame and scorn for actions 
carried out - as Eduardo 
Mo r a les , quoted in the 
article, quite correctly says 
- fay those who were more' 

hot-headed than him? 

History in South America 
has repeatedly shown that . 

when power (real or notXJs 
placed in the' hands of those 
who were not born to gov^ 
era, abuse and anarchy 
ensues. - < - s 

ft is thanks to Pinochet 
that Chile is nolangerwhat 
it used to be. And we cammt - 
and should not deny him : : .. . 
this credit. 

Miguel A. Solari. 

106-15 Queens Blvd, 

Forest Hills, - = - 

N.Y. 11375 , - - ‘ 'Vi 

US • : 

Nothing ugly about drive for plastic cars 

From Mr Peter Mapleston. 

Sir. Stuart Marshall’s 
article "Plastic cars - just 
who wants them?”. (Septem- 
ber 27-28) would have been 
better entitled “Ugly cars - 
just who wants them7”. The 
fact that the Chrysler CCV is 
ugly has little to do with it 
having a plastic body. 

As he himself points out 
the Renault Espace has an 
(almost) all-plastics body 
and is, to my mind at least 
one of the best-looking AP Vs 

(all purpose vehicles) 
around. The first version of 
toe General Motors Saturn 
had an all-plastics body. An 
increasing number of cars, 
from the likes of Mercedes 
Benz, Renault Rover and 
Volkswagen, have plastics 
bumpers. And as for plastics 
only being used far nan- 
structnral parts, let me 
remind him that suspension 
spr ings on many tr ucks are 
made in plastics composites, 
the drive shaft on several 

vehicles, including the 
Espace I believe, is also 
made in plastics comp os ites, 
and toe BMW Zi bad a 
plastics body AND a plastics 
Horn- pan.; 

Peter Mapleston, 
senior editor. 

Modern Plastics 

The McGraw-Hill 

Largo Schuster 1, - 

1-20122 Milan, Italy • 



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fniertiet bitpj/umn\audemarspignei .com e-mail 

C hancellor Helmut 
Kohl of Germany 
may pride himself 
on being the model 
European, but. in Brussels, 
the seat of the European 
Union, Germany is being 
seen increasingly as a model 
of how not to behave. 

Over the past few months, 
in discussions of state aid to 
industry (as an a number of 
other matters, such as EU 
budget contributions and 
farm reform), Germany has 
been taking the title of Euro- 
pean troublemaker-in-chief 
away from tbe UK. The Ger- 
mans, says tbe Commission, 
which upholds competition 
among the EITs 15 member 
countries, are distorting the 
single market "Germany is 
going to think we are declar- 
ing war on it” says a senior 
Commission o fficial 
The Germans argue that 
in individual cases they are 
justified and. in general, the 
increase in subsidies has 
been caused by eastern Ger- 
many. “No other EU country 
has bad to deal with what 
we have had to face," says a 
German diplomat in Brus- 

Tbe first shot in tbe con- 
flict came last week when 
the Commission launched an 
Investigation into allegations 
that Westdeutsche Landes- 
bank. Germany’s biggest 
publicly owned b ank , 
received up to DM5.9bn 
($3.33bn) in unlawful state 
aid. WestLB says it is confi- 
dent tbe investigations will 
demonstrate that the capital 
injections were legal; the 
state government in DQssel- 
dorf. which guarantees the 
bank, predicts that the affair 
will be settled before reach- 
ing the European Court. The 
Commission is convinced of 
its case and bas promised an 
i eventful autumn. 

So what has gone wrong? 
In the 1970s, Germany was 
the proud upholder of free- 
market principles in the EU. 
Now it has surpassed all 
mem her states - bar Italy - 
in the subsidy stakes. EU fig- 
ures published last year 
show that in 1992-94. German 
subsidies were 2.6 per cent of 
gross domestic product and 
5.4 per cent of public spend- 
ing, tbe highest in the EU. 
Subsidies to industry were 
Eco2,012 ($1,812) per 

employee, pushed up by 
massive payments to eastern 
Germany. Only Italy was 
higher at Ecu2,379. 

The EU’s bad boy 

is Germany, say Emma Tucker and Peter Norman 

The Kiel Institute of World 
Economics believes the level 
of direct subsidies and tax 
breaks is even higher - at 
around DM3O0bn a year, or 
8.6 per cent of GDP. If you 
include additional indirect 
benefits - such as credits 
and guarantees from public 
sector banks - that could 
bring the total for Germany 
up to DM400bn- The institute 
questions whether subsidies 
on this scale are compatible 
with a market economy. 

So does the Commission. 
Some officials trace the dete- 
rioration in Germany’s state 
aid record back to the vast 
casts of unification. At first, 
there were few problems. 
“There was even an exces- 
sive German attitude of not 
asking for special treatment 
from Brussels,” says one 
senior competition official at 
the Commission. “When we 
offered them a special lim- 
ited exemption from the 
rules governing aid to ship- 
yards they rejected it.” 

But when stagnation hit 
western Europe, this atti- 
tude changed.. The govern- 
ment threw even more 
money at eastern Germany. 
With unemployment in west 
era Germany rising it too 
received higher subsidies. 

Even so, most cases still 
continued to be resolved 
amicably. Then came two 
cases which probably did 
more to sour relations 
between Brussels and Bonn 
than all the other subsidies 
cases put together. . 

One was an extraordinary 
showdown last year between 
Kurt Biedenkopt the Chris- 
tian Democrat prime minis- 
ter of the eastern German 
state of Saxony, and Karel 
Van Miert. the EITs competi- 
tion commissioner- In what 

The tensions 
between Germany 
and liberalisers in 
Brussels will not 
disappear once 
the stresses and 
strains of 
unification have 
gone away 


Commission officials said 
was one of toe most blatant 
□outings of EU rules, Mr 
Biedenkopf ignored an order 
that DM90.7m of aid to the 
profitable carmaker Volks- 
wagen in Saxony was illegal, 
and paid it anyway. The case 
has not been resolved. “It 
was the first time a German 
politician said he did not 
care about EU rules," says 
another competition official. 

The other case concerned 
Bremer Vulkan,- the German 
shipbuilding group that col- 
lapsed last year, and where 
German state prosecutors 
have alleged that funds des- 
tined far east German yards 
were diverted to prop up 
shipyards in toe west 
“These two episodes 
totally overshadowed a rela- 
tionship which was cm toe 
whole not easy but quite 
constructive," says a Com- 
mission official. “We now 
have to see whether we can 
find that relationship again." 

Doing so could prove diffi- 
cult “With utiWmBwi and 
the gradual disappearance of 
the war generation, the Ger- 
mans are just learning to do 
what other member states 
have been doing for a long 
time: using us as a scapegoat 
and telling ns to get stuffed,” 
says a Commission nffirfai 
The tensions between Ger- 
many and liberalisers in 
Brussels w£0 not disappear 
once the stresses and strains 
of unification have gone 

In fact the Commission is 
up against a subsidy addic- 
tion ingrained In Ge rmany 
long before unification. Pub- 
lic subsidies, as defined by 
tbe finance ministry, nearly 
doubled from DM31.4bn in 
1970 to DM604bn in 1980 and 
increased further to to 
DM78J)bii in 199Q. This year, 
they will reach a record 

Among Institutional fac- 
tors cementing Germany’s 
subsidy culture has been the 
decline in influence of the 
economics ministry. In the 
1950s. the ministry ranked 
high in the cabinet pecking 
order and ensured that Ger- 
many’s “social market” 
economy paid as mutdi heed 
to market forces as the wel- 
fare state. Recent incum- 
bents have been close to the 
bottom of the pecking order 
and the ministry’s main 
nmetion today is to disburse 
state aid. 

German y’s political experi- 

ence until unification also 
left politicians disinclined' to . 
cut outlays. Economic 
growth bred politicians .at 
every levd who could secure 
popularity by increasing 
state spending, raising the • 
electorate's expectations of 
state largesse. 

Thus Germany has been 
slower than countries such 
as Ihe UK^ France and Bel- 
gium to reduce subsidies to 
dying industries, such' as 
coal mining/ Government 
plans foe a gradual reduction 
in spending on the industry 
were diluted earlier this year 
following angry protests by 
miners in Bonn, supported 
by the Social DeanocraMed 
governments of- the coal min- 
ing states of North . Rhine __ 
Westphalia and Saarland. 

The industry will be Tutored ' . flj 

by 2005 bat at a total cost of • - 
DM69.l6bn in support for ' 
sales and pit. closures . 
between now and thmv ■ ■ 

Faced with these trends, 
Brussels wants to. move .• . 
against Germany, even * 
though, under the current 
state aid regime, Its room for .... 
manoeuvre is limited:, the. -V . 

EU allows a certain amwint 
of leeway for granting st a te' • ' 'J . 
aid .’•••*’ ■ 

Later this year^the Conzmis-^ 
sum plans to present prpptos^- • 
als for tightening the stated 
aid rules and deptiftiefeting' ~ 
the process by making . - . 
assessment of cases more.’.-' 
transparent and. open -toi.. 
comment \ . 

Part of its motivation, is - 
the growing realisation; tfiat L K’'- - 
the situation sends tie 
wrong signals to the 'east-, -i 
European countries nwt' jri.- 
line Cor EU membership- ' - - - 
Poland, Germany’s hinffer- V :- ?; 
land, is a particular -head-: -" ~ . • 
ache for the Commlsslwi. , rj ' ^ ■ . 

“The message that stated . 
aid distorts the single . •■-.■V-'.- 

ket does not appear to have''"' '' 
got through to thd'Polisli •• 
government which' Ts still-''. 
pouring money into. - its 

Uhl Uo U Ibk.” say«t an 

But only the member. ^ ‘ 
states can approve ^.the .' :;// .! 

tougher state . aid proposals - ! 'L"\ 
and few. Including Germany;;/ 
will want to hav» 'theSr ' “ ' 
powers limited ... u 
This , leaved the Ckanmds'’ ^ . • \ 
sian With a difficult fight .- -j 
one, however, 1 ' should-' -• - 1 

estimate Mr%ri Mart . \ 

Germany starts fo act lft^-a ] 

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Tuesday October 7 1997 



Campaign fin ance reform in 
! Washin gton is tunring from a 
dra ma into a farce, The latest 
| episode is due today in what is 
! likely to be a knife-edge vote in 
the Senate on. the McCain- 
Peingold bill, which to 
curb unregulated donations to 
political parties. In the most bla- 
tant of political ploys, Trent 
Lott, the Senate majority leader, 
has introduced an amendment 
which be hopes will aitteiftte the 
reform issue — and twa^A the 
Democrats appear irresponsible. 

Does this matter? There are 
coherent arguments against 
reform - expressed most 
robustly by the Republican Sen- 
| star Mitch McConnelL 

He claims that democracy is 
working well in the US - wit- 
j ness the way the Democrats 
came roaring back in the 1996 
election, two years after the tri- 
umph of the right in mid-team 
elections. And he uses the con- 
stitution to attack the proposed 
i reforms, arguing. that the First 
Amendment government 
the power to determine that 
! spending money in order to pro- 
mote one’s; political views is 
improper or unwise. 

Besides, such reforms have a 
way of leading to unintended 
consequences. Fast attempts to 
limit cash contributions have 
tended to open the floodgates to 
, new rivers of money, sometimes 
from sources which are harder 
i to trace and control. 

Yet . events of the past few 

weeks have confirmed that the 
present arrangements are very 
uns a tis f actory. Vice-President 
A1 Gore Is in political trouble 
for What appears to anyone out- 
side the Beltway as the most 
trivial of offences — apparently 
using the wrong telephone to 
make campaign solicitations. 

Meanwhile, mu^h more ques- 
tionable activities are not being 
seriously addressed. A string of 
more or less sleazy figures have 
been testifying about the ways 
in which they channelled very 
large sums of money to both 
parties in the 1996 elections: no 
cme seems to care that much. 
President Clinton, while argu- 
ing the case for change, contin- 
ues to feature at fund raising 
dinners to help reduce his par- 
ty's enormous debts. No wonder 
American citizens appear to be 
growing increasingly cynical 
about their political leaders. 

The rational approach to tack- 
ling these problems would be to 
start at the other end, by seek- 
ing to reduce the costs of run- 
ning for office. Free television 
time for serious political parties 
would be one approach; federal 
funding, on the German model, 
would be another. 

But there is no possibility of 
such reforms being passed in 
the US in the present climate. 
So something along the lmra of 
the present trill, which seeks to 
control the grosser abuses of 
parly funding, is the best that is 
likely to be an offer. 

No defence 

in 1993 Les Aspin. then US 
secretary of defence, summoned 
American armaments air- 
craft m a m i fa^ t rt T v ra to a cele- 
brated last supper”, and toM 
them some were surplus to 
requirements. He was- right. In 
four years, mergers have 
slimmed the US industry down 
to a handful of players. 

British aims and : aircraft 
manufacturers will not view 
yesterday's meeting with 
George Robertson, the UK 
defence, secretary, in quite the 
same hght Hardly anybody dis- 
agrees with his warning that 
the European defence sector 
must also “rationalise or die". 
But consolidation into a few 
focused groups wDI be harder to 
achieve in Europe than in the 
US, given differing national pri- 

The ultimate goal is beyond 
the grasp both of individual 
companies - though they must 
take the lead - and of Mr 
Robertson. France has shown 
little sign of wanting to acceler- 
ate a European solution, and 
every sign of wanting to 
strengthen its own industry 
first Hints that Lionel Jospin’s 
government supports reorgani- 
sation -of > Airbus need to be 
translated • into action. Compa- 
nies from other European coun- 
tries are naturally reluctant to 
| show their Hands. 

But the rest of Europe cannot 
afford to wait for France. Mr 
Robertson is right that the pres- 
ent array of medium-sized com- 
panies will not be able to com- 

pete in the long term against 
the likes of Boeing, Lockheed 
Martin and Raytheon - based in 
a country where the procure- 
ment budget is twice that of all 
western Europe. So the first 
moves have to be made. 

The Eurofighter programme, 
in which British Aerospace and 
Daimler-Benz Aerospace are the 
main partners, might offer 
Opportunities for savings if it 
were to be run as a single corpo- 
rate ^entity. There -also must he 
scope, for example, for rational- 
isation among Britain's makers 
of tanks and other armoured 
vehicles. To achieve the neces- 
sary leanness, many more jobs 
will have to be . lost across 
Europe in an industry which 
has already felt the effect of the 
end of the cold war. . 

Businessmen may tffmflde 1 * at 
Mr Robertson’s approach. They 
may ask whether he. can really 
deliver more co-operation from 
other European governments. 
On the nnp hand he insis ts that 
he will not pick winners. On the 
other, he warns that the deci- 
sions of governments, as sole or 
large buyers, have a profound 
effect on the defence and aero- 
space industry, which sounds 
like a veiled threat . 

Governments should make 
more use of the European pro- 
curement agency they have 
established. Manufacturers in 
Britain and Germany should 
prepare to go ahead without 
French participation. For both 
sides, the time for discussion is 
rapidly drawing to a 'dose. 

Better justice 

The sweeping proposals for 
I reform of the UK civil Justice 
system, put-forward by Lord 
Woolf over a year ago, risk fall- 
, ing foul of the Labour govern- 
ment’s preference for selective 
faiptonwitatto i. 

Lord Irvine, the Lord Chancel- 
lor, has only just received a sec- 
ond report, assessing the value 
for money of the Woolf propos- 
als. But on several key issues 
tiy* government seems already 
to have made up its mind, with 
economy paramount. 

R says it would like to extend 
the scope of the conditional fee 
where clients only pay 
their lawyers if they win. At 
present “no win, no fee 
arrangements are confined to 
pergonal injury, insolvency and 

hirman rights C3S6S. 

The government also plans to 
: cut delays and costs in errij 
leases by implementing Lord 
1 Woolfs proposal for a fast track 
I procedure, with, fixed costs,, for 
Aiaima up to £10,000. With these 
two reforms it hopes both to 

injury rflafanH generally have a 
high success rate. By contrast, 
only a handful of insolvency or 
human rights cases have been 
dwalt with on this basis. 

Lawyers, keen not to see the 
scheme undermined, have 
warn ed that introducing fixed 
fees for cases up to £10,000 
would make c o n d itional fees 
unworkable. They would not 
enter into such agreements if 
the fixed fee did not reward 
them adequately. - - 

Hie government is making 
much less noise over the 
endemic delays in the dvfl jus- 
tice system, for which Lord 
Woolf rightly placed most of the 
blame on lawyers,. He stressed 
that the interests of the court 
user should take priority over 

legal aid bSL 
Research by the Policy 
Studies Institute suggests the 
conditional fee scheme is wak- 
ing wdl for personal injury 
cases. Lawyers Bke the scheme. 
But it is too early to say 
whether it has succeeded in 
. extending access to justice. 
Many cases might have been 
taken on anyway, personal 

The Woolf proposals were far 
much more active manag emen t 
of cases by judges, to bring 
brisk and efficient justice. 

The government should bold 
to Lord Woolfs proposals. It 
should fawpiPiraait the fast track 
procedure as soon as practica- 
ble. A cautious extension of con- 
ditional fees may also be war- 
janted. But condition al fees a re 

no panacea. If the government 
wants to cuxfithe dvfl legal aid 
WD it should facus on reducing 
the unit cost erf cases and 
improving efficiency- 

Above all it should resist me 
temptation to chmy-pack Lord 
Woolfs reforms for short-term 

On the brink of recession 

Japan has only just woken up to the dreadful state of its 
economy, and has little idea of what to do, says Paul Abrahams 

T he Japanese economy 
is going from had to 
worse. Yesterday’s 
gloom lookB like 
today's optimism. The 
debate is no longer about the 
extent of Japan’s economic 
expansion this year. It Is about 
whether the world's second-larg- 
est economy is merely stagnating 
- or teetering into recession. 

Until recently, the country’s 
politicians bureaucrats Hart 
Insisted that the economy was 
recovering slowly from its lon- 
gest and worst economic slow- 
down since the second world war. 
They had admitted that April’s 
increase in sales taxes - aimed at 
narrowing the huge fiscal deficit 
- would hit growth. But they 
insisted that the effects would 
only last a single quarter and had 
pooh-poohed private analysts’ 
predictions of economic contrac- 
tion- Instead, they said, growth 
would hit their target of 13 per 
Cent this financial year. 

They were wrong. AH along, 
they looked like they were in 
denial. And sure enough, a series 
of dreadful economic data have 
destroyed their over-optimism. 
The scale of the economic con- 
traction they reveal is alarming 
by any measure: gross domestic 
product shrank A9 per cant in 
the second quarter. The slow- 
down has not only been more 
severe than expected. It has also 
lasted longer. 

The economy, the government 
had hoped, would recover after 
June. But in August, adjusted 
household sp endin g continued to 
fell, dropping 0.5 per cent com- 
pared with August 1996. Indus- 
trial production also continued to 
slump - down 22 per cent an an 
already weak July. 

The growing sense of crisis has 
been heightened by a string of 
announcements that forecast 
profits are bring downgraded and 
by a worse-than-expected survey 
of business sentiment. Market 
expectations of economic growth 
have sunk ever farther the yield 
on Japanese bonds yesterday 
tumbled again to just 1.755 per 
cent, the lowest anywhere for 

The gravity of Japan's plight is 
dawning only slowly on its 
bureaucrats and politicians. Last 
week, Koji Omi, the director-gen- 
eral of the Economic Planning 
Agency, hitherto the most upbeat 
part of Japan's bureaucracy, 
admitted the economy might 
undershoot its 1.9 per cent 
growth target The following day. 

W ith the Japanese econ- 
omy heading towards 
recession, what on 
earth can the government dn7 Its 
options are painfully limited. It 
can hardly cut interest rates: 
they are already at record lows. 
Devaluation would infuriate the 
US, and might not help the 
domestic economy ranch- And 
though the government is prom- 
ising more deregulation, this is 
unlikely to deliver any 
short-term boost 
This leaves another option: fis- 
cal policy. At first glance this, 
too, is dURcnlt The budget defi- 
cit is already 7 par cent of gross 
domestic product and the prime 
minister, Ryutaro Hashimoto, 
has staked his reputation on 
reducing It By early next 
decade, he hopes to cut the defi- 
cit to 3 per cent of GDP. That 
seems to rule out the usual way 
of countering consumer gloom, 
namely income tax cuts. (Any- 

Ryutaro Hashimoto, the prime 
minister, also conceded the econ- 
omy would probably miss that 

To some extent Japan has only 
itself to blame. Mr Hashimoto 
and the ministry of finance m«A» 
a terrible blunder when they 
derided to raise the sales tax this 
April from 3 per cent to 5 per 
cent while simultaneously cut- 
ting back public investment 

The policy erf fiscal tig htening 
was not in itself, wrong-headed: 
efforts to pump-prime the econ- 
omy in the middle of the decade 
had left Japan with the worst 
budget deficit among the G7 
nations. Fiscal tight ening was 
imperative. The mistake came in 
the timing. 

Mr Hashimoto and his policy- 
makers were lured into a false 
sense of security by steady con- 
sumer demand at the end of 1996 
and almost boom-like conditions 
in the first quarter of this year. 
Private consumption rose a 
heady 43 per cent in the -three 
months before sales tax was 
raised. What has since become 

obvious is that an unsustainab le 
boom was created as Japanese 
co nsum ers end companies rushed 
to spend before the tax increase. 
Once the tax was put up in April, 
demand fell off a cliff. 

Consumer wmfirtpiw was also 
eroded by the decision to cancel 
June and December’s traditional 
tax rebates and to raise patients' 
contributions for medicine and 
hospital visits. 

In spite of the gloom, Japan’s 
lacklustre economy could avoid a 
recession - and settle simply for 
stagnation. Year-on-year GDP 
and consumer demand figures 
will almost certainly deteriorate 
in coming months because of last 
year’s pre-sales-tax boamlet. But 
seasonally adjusted month-on- 
mo nth figures indicate that, 
although the economy is in bad 
shape, it may not be getting any 
worse. Retail sales, for example, 
actually rose 23 per cent between 
July and August 

Nevertheless, Japan's economy 
wDI register at least two quarters 
of year-on-year contraction. It 
will do extremely well to escape a 

technical recession, defined as 
two consecutive quarters of nega- 
tive growth. 

Real incomes have fallen. Infla- 
tion, boosted by the sales tax, is 
running at about 2 per cent But 
basic wages in August rose just 
13 per cent year on year, while 
overtime, an important compo- 
nent in take-home pay, actually 
fell 31 per cent 

The fell in real incomes and 
the consequent drop in consumer 
demand has had a knock-on 
effect on industrial production. 
Evan the car industry, which 
until recently bad been relatively 
strong, has weakened. Domestic 
sales in the six months to Sep- 
tember fell 93 per cent a col- 
lapse that caught the industry by 
surprise. Motor manufacturers 
have been stuck with substantia] 
numbers of ™mii! vehicles and 
have had to cut production, in 
August by 10.4 per cent Indus- 
tries supplying the sector, such 
as chemicals and steel, have also 
been hit hard. 

Becalmed at home, it is doubt- 
ful whether the Japanese rnanu- 

What do we do now? 

way, these may not even work 
any more: Japanese consumers 
appear so worried about the eco- 
nomic outlook that they may 
choose to save any additional 
income rather than spend it) 

All the same, fiscal policy is 
all the government has left 
Later this month, it is likely to 
announce a combination of new 
proposals, plus old ones 
revamped. The upshot could be 
tax cuts. 

One target is corporation tax. 
Businesses and the Ministry of 
International Trade and hvhwt ry 
have been campaigning for years 
for a cut in rates, which are 
same of the highest In the world 
(see chart above). NGti estimates 
that a 10 percentage point cot in 
corporat e tax would boost busi- 
ness so much that any loss of 

revenues would be offset within 
six years. The ministry of 
finance has resisted this Idea so 
far. Though it has offered tax 
cuts of 2.5 percentage points, it 
wants this offset by the abolition 
of corporate tax breaks on Items 
like c omp a ny housing. Support 
is growing among politicians for 
more radical moves: some cuts, 
alongside reduction in tax 
breaks, are likely to come soon. 

Another option is the securi- 
ties transaction tax. Some offi- 
cials are keen to reduce this in 
an effort to encourage higher 
turnover in the stock market 

A third idea would be reforms 
to boost the underdeveloped 
market In securitisation (the 
issuing of bonds backed by the 
income stream on assets, like 
property). The logic behind this 

is as follows. One factor drag- 
ging the economy down is the 
weak property market and 
banks’ huge bad loans, many of 
them property-related. If banks 
restructure these into asset- 
backed securities, the argument 
goes, they could sell them to 
investors more easily. This 
would allow them to dean up 
balance sheets, which might 
boost the property market 
To achieve this, the govern- 
ment is likely to announce the 
abolition of restrictions on secur- 
itisation. This move is unlikely, 
by itself, to solve the bad debt 
problem - many Japanese banks 
are reluctant to sell bad loans 
with or without securitisation. 
But the government is also con- 
sidering reducing the transac- 
tion tax on property sales, after 

factoring sector can offset stut- 
tering domestic demand by rais- 
ing exports. Automotive exports, 
assisted by the weak yen, did 
jump 41 per cent in August com- 
pared with the same month last 
year. But the US and Europe are 
already complaining about 
Japan's rapidly expanding trade 
surplus. As for Asia, demand 
may well be hit by the recent 
currency crisis which has made 
Japanese exports more expen- 
sive. In any case, exports account 
for only 10 per cent of Japan's 
GDP, so additional exports would 
not only be politically risky, but 
economically mar ginal. 

The timing of any eventual 
recovery may well depend on Mr 
Hashimoto. In the long term, 
planned deregulation should 
boost the economy. And in the 
short term, he could he tempted 
to launch an emergency rescue 
package. What is clear is that 
whenever an upturn does occur, 
it will, not be dramatic. Mean- 
while. the only question is how 
bad things will become before 
they get better. 

lobbying by banks and brokers, 
to spur the property market. 
Nikko Securities calculates that 
a 20 per cent reduction in this 
tax could boost property sales by 

Will these measures be any- 
thing more than a public rela- 
tions exercise? Though they 
could help boost growth, any 
real impact is unlikely to come 
until next year. What they will 
do is give Mr Hashimoto 
face-saving evidence, when he 
meets US president Bill Gfinton 
next month, that Japan Is trying 
to do something. 

And the US may have an addi- 
tional reason to welcome some of 
the reforms. If the securitisation 
market grows ft could generate 
lucrative fees for Investment 
banks. The likely winners from 
this? Foreign houses, an| l, in par- 
ticular, Wall Street’s. 

;^ v - : ' ; . 


'.’y -"i ■Q.ry'ti&kf . ... 

. y- & FtatuKeCkcrapt, Based in. *; .. rr '. 
c- ■;*. . » iff- -S nrit?pTfamri r*Pha Latsis feimily’B 
: •. i |^ : wa^ifTOCkl^ days; would seem: 
...... . •:>*.? Wj~ tdbe ovaiVf- \ • • > . ' I’.*:. 1 ■; 

■ jftlbdta :, tike Swwfefetanl»*tf v^/Fredriksras; on ti» other band, 
outfit ICB'S Md to buy, Astro? ^ .to have seme swashes.. 

~ ; Tankers frmntha Greek . -Ij^tolmieklerBvaa without JOB;-.; 

family has '.■* £• Fft mt J inft ^ifeg ^TQnrtfafev iaB-. ■ 
- Wahwat ifte rival offs: ^ - ; aldpping couqjMQr he acquired : * 

‘ maverick Norwegian tyoxm . f last yaar for|45Sm ~ tobks set to : 

\kxtm FredriksenjBut ' "LS'&vS buonfi xrf tt^wmrld’stxgi off , ^ 

‘ '* -- 

the UK-gootsid Lahdon & jr-;.VW T^Tb&^y^aiHild safinon / r # ’ 
fh M W MM •obmai With " ■■ * •'fisTienaiin hotds^COto*t3t Ofio’d , 

jaumafets yesterdayat a / 
^erpwded pressctmftesence in 

yWwj>» tii laimrf f tfiB pri t mi i wrHr fti 

; xdadsl 

■ T&is might seeni surprMng for 
- a. former -head af ltaly*s stock - 
: iEa perhaps ' 

not so strange^ whenYim ■- 

ranoribe-?that the Harvarfl- 
wasoheean . . 

fleet of «ffleriy aupertankemS', 

IThelatta: deal’afap, 
bBJcfa the Greek 

* -fas when 
; local&ix&r to his - regular table. 
.X sis $3jmgiabavl to memory, of . 

of ttorGmf . 
dmihg l the,lra%fr , aq vrar r ..: 

. But he's fa ids- 8Gs am-TaST i - /£ 
banded th&hekn to h&san' v v v 
Spiros asober eccaimdist^wbo’f" 
mare tojewsfed to btofeawthaji- 
. sa^p^-asdiatefes^ct^ “ ^ 

• wbkih^re^s^ 

Greet ^abtodvraeis- -id 

TptofiRttte Rossis-aannitom:. 
samantom fratr- tosiijg#'? * •’? 
sbareato bis rimsparar^-So fie. 7 ' 

■ the hforiqSmttnr J: 

-TSeebm Ht^ptd^cidDtFJS it d 


; , But there Is-one ■ 

: won't rush ctot 'tobuy TMectBn 

■ frHjepmdentcffinmtmist senator. 
A 3filanbanker- at tbe roadshow 

: MdEoesTB avwstfon tdsfcares 
was ; nothing to ^ (io wUb prinriple. 
fRossi likectoinvEStin art and. I 
money buying andaeffing ; 

■ pwtntfng w and frr inkp tk, 1 * htOBrid. : • 

Card •' ! -i 

rM have -I 

nowiaitSetofeld, America's - 
- blgg^ sftcoso, whose . ' ' r 

ba&fang fronted up- commen&tfe 
.for AmGricattExpress. ^ - 
''Atototoafi£toPre^s>s«om - - 
feemtoaatV&aaoad Mastered 
1 fiav^S^ed^miiteiit New . r ; 

; Yoflc abafiihnatoefismto^ • 

ISaxcy Kttoag to. : - 
; • ; 
wbito tiwyTe pflofatg iai 

' notable for starting numerous 
--.mosiiccesshi) money making 
: wbeezes.which perhaps 
qualifies him to front up "a ■ 
product which has yet to make 
anybody, any money in the US. 

HeTl-hape to have better luck 
in his various ventures than he 
did to yesterday's press launch, 
5n.Ujazzciubopposite the 
M^ntooHfcan Opera House. As 
cameras clicked, he was 
supposed to “toO" a copy of the 
. New York; Thn es and a packet of 
: ejw wir ^ g niTi tn a ’‘cUR tomgr " 

. fof uffiritacefy $130. Sadly, the 
jtoUi^ bignigshadonlypm . 
99 cods on the card. 

Horse sense 

: -U Samsung Asia chief executive 
Ahn Dotik Kee Is keen to make a 
splash over his company’s 
- QxmscKSbiip of the 2000 Olympic 
Gajms in Sydney. As guests 
polislffid off their tueker at the 
Soutli Korean etecmaiics 
^cotopany'?ia«seHtation, in .. 
..trattodaa "ElectrtoCtrwbt^ oh 
•a chestout hDrse decked in fairy 
: : ligtos^md pirouetted around the 

„ . Much, hype has been lavished 
ah; the jOlytapics over the years, 
ap poteyay«3topany whidi 
tnanagas focameLupwitba new ; 

pziitate banks and 
c toapati feB tofyeberat 


do afi lpddstiy'toi fhe ’ - '^jresent^^'^Iai^ to the ' 
-se&es*. Ooianois ■ iflW Olympics at showjun^nng. 

Gillian Tett 

100 yean ago:> 

Proposed Faorilles Tunnel -v 
The proposal tocutrattomd 
throa^i the'Fauriltes and to : 
complete the railway from St V: 
Laurent to Geneva as a set-off = = 
to the new Simplon Tunnel is 
being actively taken up. The, r * 
cost is estimated at 3B.QQ0^)pQ'C 
francs, biit It is calculated 
that the cutting of ti» St i " > 
Gothard Tunnel resulted for '% 
an annual loss to France 6^ •■7- 

40,000,000 francs which- wiB be r ’ 
considerably increased - wben\. . . 
thfl Simp lnri T nnnal k:. * 

completed. The schentois - 
warmly advocated both from -vT 
an economic and a patriotic ' 
point of view and thereseems 
the probahQtty of a forward: . 7 . 
step being Jflimtly iafceh ih - . 
the matter. - - ” 7.— 

50years ago 

Less Thnber ForF m ulUue - 
For the next quarterly ' 
allocation period which starts 7 
at once, farmtare . • 

Tnarmfflfh yror^ thp hfi»m« ; 
market Wijl have their timba*: 
supplies lor "carcase 1 ' gnotfe 
out by 25 per-cent Tfcfe '• >' 
affects wardrribes, ' . - 

dressing-tables, sid^oards: r c 
and all cahtMts. For- V; vv 
upholstery, jdteben cahtoeto r-. 
an rt pp pjaininnl fbr nftifre, thin 
reduction is 1714 per' rent: ; -f • 
This was anpotmtwi by tiK_ .- 
Director of Pamitme ; 
Producticai at the^BatocEiaC. j 
Trade^ Mr As, E. WaJsto Ttfe / 
cut applies to.allliardwood^; 7 . 
soft woods and plywood, .. 

a P* 


Fountain Forestry 


VHITIB KMSBOit^tr OtJ»S 750000 
ONITID ITATM: 9.-061 <503 435 8234 


Tuesday October 7 1997 

Occidental set to pay 
$3.65bn for US stake 

8y Christopher Partes 
in Los Angeles 

Occidental Petroleum is poised 
to treble its US oil reserves 
and double its gas holdings by 
paying $3.B5bn for the federal 
government's 78 per cent stake 
in Elk Hills Field, California. 

The agreement, heralded 
yesterday by the Department 
of Energy as the biggest priva- 
tisation in US history, pn fl s a 
close-fought auction that 
attracted wide International 
interest and 22 bids, the 
department said. 

Occidental said it planned to 
raise S4.6bn from the sale of its 
Midcon natural gas pipeline 
and other assets to fund the 
cash purchase and finance a 
Slbn share repurchase pro- 
gramme, also announced yes- 

Analysts said the California- 
based company had paid a fair 
price for the field's reserves of 
lbn barrels of oil equivalent 
and the stock was marked up. 

Group shares rose 51% to 
$2S% in early trading In spite 

Of the Simultaneous aTinrinnrn. 

meat of a 26 emit per. share 
charge against earnings in the 
third quarter to cover pay- 
ments of $112m to compensate 
two top executives for revi- 
sions to their contracts. 

Ray Irani, chairman and 
chief executive, is to be 
awarded 995m, and the balance 
will ■ go to Dale Laurence, 
group president 

The company said it expec- 
ted earnings of 40 cents a 
share for the quarter, in line 
with forecasts from analysts 
who had expected the charge. 

Chevron, which owns the 
remaining 22 per emit of the 
field, said the deal did not 
affect its position. But Bechtel, 
the closely held San Francisco 
engineering and construction 
group, which has operated Elk 
Rills on the government’s 
behalf; win be displaced by the 
new owner-operator. 

Occidental said its stake in 
the field contained about 670m 
barrels of afl and L9 trillion 
cubic feet of gas - sufficient to 
increase its global reserves by 

75 per cent to 23bn barrels of 
ail equivalent. 

Its domestic pxodnetion of 
oil would almost double cm 
completion of the deal. US 
gas output would rise 20 per 

Occidental said it expected 

future oil extraction rates to 
rise 75 pm- cent and gas output 
to increase more than three- 
fold during the field’s expected 

productive lifespan of more 
than 80 years. 

Plans to sell Elk [fills were 
announced by President Bill 
Clinton in 1996 as part of a 
move to extricate government 
from Industry and help bal- 
ance the federal budget. 

The 75 square mfip field was 
taken over by the go ve r nment 
near the turn of the century as 
a fuel reserve far the navy's 
Pacific fleet. 

It lost its strategic impor- 
tance with the arrival of nucle- 
ar-powered vessels and the 
establishment of the Strategic 
Petroleum Reserve, and was 
turned over to commercial afl 
production in 1976. 

Malaysian PM dismisses 
rumours he might resign 

By James Kynge 
in Kuala Lumpur 

M ahathir Mohamad, Malay- 
sia’s prime minis ter, yesterday 
dismissed rumours that he 
might resign. He said foreign- 
ers had tried to oust him 
by sowing discord between 
him and Anwar Ibr ahim, his 

The prime minister, return- 
ing to Kuala Lumpur from a 
trip to South America and 
Cuba, predicted currency trad- 
ers would drive down the 
Malaysian ringgit today 
because “Mahathir is opening 
his mouth". 

“Dr Mahathir should keep 
his mouth shut ... so that cur- 
rency traders can raid every 
country and get away with it," 
the prime minis ter said, a ref- 
erence to what he sees as 
attempts by powerful foreign 

speculators to impoverish 
developing countries by 
attacking their currencies. 

But it has become dear that 
dissent is rising within govern- 
ment circles. Many officials 
say privately (hat tho handling 
of the south-east Aslan cur- 
rency crisis by Mr Anwar, who 
is also finance minister, baa 
been more rational. 

'1 wish the PM would just 
stop his talking," one official 
said privately yesterday. 
"Anwar has to spend his whole 
time cl eaning up after him.” 

Mr Anwar, 50, acknowledges 
that Malaysia has economic 
problems, such as its trade and 
current account deficit. By 
contrast. Dr Mahathir insists 
the country's fundamentals 
are "very strong", and repeat- 
edly lashes out at the foreign 
media and fund managers. 

Political observers say Mr 

Anwar, whose rivalry with Dr 
Mahathir been a behind- 
the-scenes affair for many 
years, is unlikely to launch an 
open bid for power. They say 
the prime minister’s power- 
base remains strong. 

Dr Mahathir, 71, has been 
prime minister for 16 years 
and shows no sign of standing 
down before his term ends in 
1999. He underwent heart sur- 
gery in 1999 but maintains 
punishing schedules. Since he 
returned from a two-month 
working holiday in July, he 
has made three foreign trips. 

Much of the recent selling 
pressure on the ringgit, which 
has depreciated by about 25 
per cent since early July, has 
been attributed to Dr 
Mahathir's anti-foreign, anti- 
free market rhetoric. 

Currencies, Page 25 

Worms’ investors takeover 

Continued from Page 1 

acquire Athena from Someal 
and sell its Worms shares for 
FFr455 each. It will finance 
the purchase through a 
FFrSbn rights issue and a 
FFrfibn increase in its debt. 
The Insurer said the operation 
would enhance its earnings 
and was designed to maintain 
its credit rating. 

The new Worms group 
would contain the existing 
assets apart from Athena, as 
well as Someal’s other assets, 
providing it with 100 of Gen- 
erate Sucrifcre, 40 per cent of 

Axjo Wiggins Appleton, the 
paper company, 5.8 per of 
Danone, the foods group, VS 
per cent of Accor, the hotels 
group, 100 per cent of Formal, 
a financial advisory business, 
and 52 per cent of Compagnie 
Rationale de Navigation, the 
transport company. 

Mr Worms said it was possi- 
ble that the capital of the new 
Worms group could be opened 
to outside Investors. Its debt 
would be FFr21.2bn just after 
the takeover, falling to 
FFr4.7bn after Athena's sale 
and the reimbursement of 
Worms' convertible bonds. 


Continued from Page 1 

under which greenhouse gas 
emissions would be cut by 2010 
to a level 15 per cent below 
that of 1990, as unfair. 

Kanezo Muraoka, the Tokyo 
governement's chief spokes- 
man, said the EU proposal 
would make it difficult to 
achieve consensus between the 
US. Europe and Japan. 

“Our proposals, which are 
fair and realistic, win serve as 
a basis for negotiations . . . and 
we want to reach an interna- 
tional agreement an the issue 
as soon as possible," be added. 

Banks join 
forces In 
big smart 
card pilot 

By John A aflws n New York 


“Smart cards” issued, by Visa 
anil MasterCard, the world's 
largest payment card associa- 
tions, are bang used inter- 
changeably for file first time 

under a pQot scheme launched 
in New York yesterday. 

Between them. Chase Man- 
hattan and Cftfbank. the two 
largest US banks, are issuing 
80,000 of the i wym e n i cards, 
which carry an embedded 
micro-processor. That is 
erKin gh for ev ery adult in Man- 
hattan’s Upper West Side, the 
affin^nt area to the west of 
Central Park which will be 
used to test the cards for the 
next six months. 

Mobile card “readers", winch 
can operate using either a Visa 
or MasterCard chip card, have 
been supplied to mane than 600 

morph am fri in the 

The scheme is by Ear the 
most ambitions aUHgpt, yet to 
launch the smart card con c e pt 
in the US. Several other large 
pilot schemes have been 
particularly during^ 
last year’s Olympics in 
Atlanta, with generally unsa- 
tisfactory results. ; 

The chips in the, cards store 
value which can tb<>n be deb- 
ited by merchants. The cards 
come with small 1 "readers" 
winch fit into a wallet, and 
allow a card holder, to check 

ttw haluniB anri pin t out 

last few transactions. The 
cards can. be reloaded from an 
ATM machine amt have mag- 
netic stripes so they can be 
used as a normal debit card. 

The banks ■ believe that by 
guaranteeing that cards bear- 
ing either the Visa or the 
MasterCard logo will be 
accepted, consumers will be 
more prepared to use them. 

The partners believe chip 
cards could be the key to their 
the organisations’ fanger-texm 
aim to supplant cash and 
Cheques as the map tnaana of 
payment, especially for small 
transactions. Citibank esti- 
mated total US annnal cash 
transactions came to SMXXftm. 

Ron Braco, who heads file 
scheme fra: Chase, said: “Each 
average debit card transaction 

today is in the 650 range and 
toe average far credit cards is 
even higher. There’s a void 
there fin- payment products. 

He suggested the new tech- 
nology would allow much 
smaller transactions. 

AH the participants accepted 
it was vital for the pilot to 
succeed. They denied they had 
any plans to levy an ad di tional 
charge for deposits that cus- 
tomers downloaded on to their 
cards. Instead they hope to 
charge for ap pHnallfui s which 
could be flddpfl to the cards, 
such as customer loyalty 

Smart card trick. Page 12 
Observer, Page 15 


Europe today 

Greece and much of the eastern 
Mediterranean will be mainly dry 
with prolonged periods of 
sunshine. Italy, France and much 
of Spain will have heavy showers, 
some of them thundery. There will 
be heavy showers across the Low 
Countries, Germany and the 
alpine regions. Czechoslovakia, 
Hungary and Poland will be 
mainly dry with spells of 
sunshine. Farther east It will be 
fine but unseasonably cold. 
Scandinavia will have rain in toe 
south, but the north will have 
sunny spells and isolated 

Five-day forecast 

A series of frontal systems wffl 
move eastwards across northern 
France and toe Low Countries 
into Scandinavia, bringing 
outbreaks of heavy rain. Some 
rain may push into central and 
southern parts before the end of 
the week as high pressure 
retreats from toe eastern 


Situation at midday. Temperatures maximum for day. Forecast s by PA WtoatharCerttre 

Abu Dhabi 






B- Aires 




Sun 35 
Fair 31 
Fair 28 
Shower ia 
Sun 25 
Sun 30 
Sun 18 
Shower 15 
Shower 34 
Sun 24 












Sun 23 
Shower 14 
Sun 24 

Fafe- 22 

Fair 27 
Fair 21 
Fair 33 
Shower 19 
Cloudy 21 
Rain is 
Sun 29 
Sun 33 











Thunder IS 
Fair 25 
Fair 24 
Thunder 20 
Sun 31 
Fafr 29 
Ftdr 29 
Sun 37 

Raki 14 
Sun 24 


No global airline has a younger fleet, 


Frankfurt Rain 21 
Geneva Thunder 22 
Gftnrftar Cloudy 23 
Glasgow Shower 14 
Hamburg Thunder 20 
Heisinfcf Sun 8 

Hong Kong Fair 29 
Honolulu Sun 31 
Sun 21 
Fair 32 
Jersey Shower 18 
Johannesburg Sun 25 
Karachi Sun 33 

Kuwait Sun 39 

L. Angeles Fair 22 
Las Palmas Cloudy 27 
Uma Cloudy 23 

Lisbon Fair 23 

london Shower IB 
Lux-bourg Rafn 17 
Lyon Thunder 24 
Madeira F ate 25 





Shower 32 





Fair a 





Fair 29 

Manchester Shower 



Uundar 28 





Sun 21 





Sun 18 

Mexico CHy Mr 



Fair 31 





Ctoudy 12 




Strasbourg Tfamdar 22 





Shower 18 





Shower 23 




Tel Am 

Fair 29 





Fair 24 





Fair 22 





Mr 13 

New York 




Cloudy 20 





Fair 21 





Cloudy 17 





Sun 28 


Shower 20 


Cloudy 12 





Rain 20 





Shower 21 


Catching Worms 

The AGF/AgneRi cuunterbid for 
Worms & Compagnie may claim to 
be designed to "avoid a break-up of 
the group", but a carve-up is pre- 
cisely what is proposed. Warms’ 
insurance business. Athena, would 
go to AGF. Me a nw hi le ffil, an 
-AgoeBi holding company, would get 
file ramming bits and bobs, nota- 
bly a trig holding in Aijo Wiggins 
Appleton. And who knows what it 
would do with than? 

That, of course, need not worry 
Worms shareholders unduly; the 
question for is whether ftg 

new ted oilers decait value. And on 
this score, it is undeniably an 

i HH a iiim r QWT t OH He? ori ginal OppOT- 

FTSE Eurotop 300 index: 
1G05.7 (-3.3) 


tmristic hid fiuiu retailer Kranpois 
Ftoault. It is much closer to ana- 
lysts’ break-up estimates. Perfect, 
h o wever, ft is sot. In particular, 
even if AGF*s con ve ni ent S per rmt 
shareholding in Worms is not 
exactly winning it Athena on the 
riiaap — it is offering a 40 per cod 
premium to net asset value - 
Warns shareholders could still be 
forgiven for wondering whether a 
truly open auction might not yield 
a better price. 

Sadly, fie question is probably 
academic. A higher bid could yet 


emerge, maybe even from Mr Pin- 
anti. But he fapps a trig snag shire 
fie fit between Athena’s business 
and AGF*s Is excrifent, the £z£ cost 
savings from combining than give 
AGF a powtrfnl edge. It may not be 
mnrfi consolation, but if Mr Pinanlt 
bows out now he shnniri at least 
have won the undying gratitude of 
Worms’ shareholders' for setting 
this value-unlocking process going: 


Could Tony Blazr deliver the Brit- 
ish electorate in a referendum cm 
file Eu ropea n single currency? UK 
wigTfcpttt had ttwfr first attacked 1 the 
jitters yesterday, as investors 
acknowledged that a mare positive 
attitude by the govern m ent Is not 
enough. The public m u st also be 
won round. 

At first gkmra L fie need to secure 
public opinion looks a formidable 
obstacle. Reoait opinion peril evi- 
dence suggests about GO per cent of 
voters want to keep the pound. But 
notice too that according to the 
Daily Telegraph’s Gallup poll 10 
days ago. 37 per cent want to join 
Bw single c ur rency. Given, that the 
debate oms- the euro has yet to be 
joined in earnest, the hurdle is far 
from insuperable. The pro-euro 
camp wfil probably Include not just 
an extremely popular Labour party 

but the Liberal Democrats, big busi- 
ness and the trade unions. Even the 
Tories will be split, with popular 
figures like Kenneth Clar k e, the far- 
. nwr chancellor, likely to Emu. 

Mr Blair, of course, is unlikely to 
call a referendum until he is confi- 
dent of winning- The expected plan 
is to make during the autumn a 
strong statement of intent to join 
Emu - but without commuting file 
UK to signing up at a specific date 
- and then attempt to soften up the 
public. The betting must be that Mr 
Blair will succeed, eventually. But 
with financial markets already 
anticipating convergence of UK and 
Ge rman bond yields by 2002, further 
gSlt rallies depend cm the public 
being converted pretty quickly. 


It Is always touching to see two 
old adversaries making up. But the 
notion that Intel and computer 
maker Digital Equipment are now 
genuine pals seems rather too con- 
venient. It comes less than two 
weeks after the US Federal Trade 
Commission launched an anti-trust 
probe into Intel, triggered largely 
by Digital's accusations that Intel 
has been stealing its technology. 

Both companies stand to gain 
from the suggested settlement, 
under which Intel might pay Digital 
at least $650m to manufacture Digi- 
tal’s Alpha chips - the focus of 
their dispute. This would allow 
Intel to incorporate aspects of the 
well-regarded Alpha technology in 
its next generation chip, struggling 
Digital, meanwhile, would 
strengthen its balance sheet and be 
freed from Alpha's $200m-a-year 
running costs. 

Nevertheless, neither company 

emerges with much credit. Intel, by 
all appearances, is buying Off- a 
critic — sum looks large; cccuud- 
ering Alpha microprocessors had a 

Tnaffept share of less than t per cent 
. last year. 'With Digital a te nc ed . the 
FTC will have a tougher .time con- 
structtog a case against fite semi- 
conductor maker. And though 
hopes. of a settfement boosted Digfc 
tal’S fla g gin g .shares yesterday, any 
deal will have to be approved by a 
presumably less-than-delighted 
FTC. Meanwhfle, Bob Palmer, Digi- 
tal's chief executive, who in the 
past, has tried- to rally tovestorg 
behind bath Alpha and the group's 
anti- Intel crusade, te acqtaring an 
unfortunate reput ati on for U-turns. 

US telecoms : 

WoridCom’s $30bn bid for 303 Is 
. a salutary reminder that, despite 
privatisations and affiances around 
the world, the fixture of the telecom- 
muni cations industry is being 
sketched out in the U$. ff World- 
Com succeeds, ft wffl. be able to 
offer . customers one-stop shopping 
by knitting ) together_ . local, 
long-distance and jn&xnri services 
based on modern fihreqpfic net 
works. And WoridCoth, tboaghffie 

one of a new breed of Internet {so-, 
viders, wireless operators and 
so-called competitive local-exchange 
carriers (Clecs> - the Generation X 
among the phone coropantes, '.[]}/- 

How will the industry's senior cit- 
izens react? One possibility: is ffart 
long-distance operators, Bke AT&T 
and Sprint,, wifi buy themseives a 
local presence. Not smrprhAa0y,'fhe 
share prices of quoted Clecs hke 
ICG Communications ». Intermedia 
Oommunicatians and Teteport have 
shot up in recent days- But even if 
AT&T were to take over every (3ec 
in the US, it would- still have onlya 
fraction of the local-lines needed to 
connect all, Its long-distance cua- 
tamers. \ : - ; ' ; .y.' 

Bolder, moves are therefore bring 
mooted, particularly since .the Baby 
Bells will soon by freed to enter the 
long-distance market. Earlier this 
year, the regulators stomped bn 
AT&T’s attempt to merge with SBC 
Communications, a .Baby BriL But 
given foiling prices, AT&T’s declin- 
ing market share and vigorous com- 
petition from file likes afWorld- 
Cam, they might take a different 
attitude in future. No-one isjtoo big 
to be a target any more. 

Addjtkmal lex conmwiil on 

London restaurants. Page 22 

[ "V 1 





JULY 1 397 ‘ 

Generate de Sante 

£ 355»ooo,ooo 
Senior Debt Facilities 

Mezzanine Facilities 

PIK Debentures 


- —.9; -1 

To support Cmven’s acquisition of the UK heahhcare business of 
Generate de Same 



4 BankersTrost Intern 

>KO : - 


* a*3i 

•;v '"~t- 
, ■•^■v.i * 
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British Midland 1 

i he A ;rti;ic for Bzinjtsc : ' 



Tuesday October 7 1997 

Week 41 

■ ' jBrjtjsh Midland^ 

H : wM^m^i^EuajpiM 



Talcing over the 
family business 

. Diamonds, De Beers 

- *- rJEspS&SAte- ‘ the Oppenheimers 

' *** inextricably linked. 

S J? * ea ^ J De Becrs 

' ' world's diamond busi- 
' ness - to the past 68 
- Tears, the South Afri- 

■' ^Bw&BSPB'SS Sj^ can group has had only 
< ■ •’ ^nree chairmen. Two of 

. . ' t hemw ere Oppen- 

Oppenheimer (left) is 
about to move mto the chairmanship to rein- 
force the family connection. Page 19 

Up against the cash barrier 

South Korea's Kla motor group has rejected 
demands fromits creditors to apply Tor court 
receivership. With the government refusing to 
help the country's third largest car group, it 
must now get by on cashflow alone. Win it sink 
under an estimated Wonll^oobn ($i2£8bn) in 
debts to become the country’s biggest bank- 
ruptcy? Page 21 

Braocil set for bumper coffee crop 

Coffee prices are likely to fall next year as Bra- 
zil, the world’s largest producer, looks forward 
to a bumper crop of at least 35m 60kg bags, an 
interna tional coffee conference heard. Page 26 

Indonesia^ central bank steps in 

Indonesia's currency and stock market lost 
more ground yesterday, although central 
intervention and promises of further economic 
reform helped cap the downturn. Page 36 





Euro Disney 

17 Tricon 


Federal Express 

18 UPS 


France Tatocom 




IS WorldCom 



23 Worms & Compagnie 


reports sendee 

30,31 FTSE Actuaries share races 32 

Benchmark Govt bonds 

24 Foreign exchange 


Bond futures and opflons 

24 Gats prices 


Bond prices and yields 

24 London Share service 


ComnxXfitee prtees 

28 Managed finds service 


DMdendB announced. UC 

22 Monqy markets 


EMS currency rates 

25 New Inti band Issues 


Eurobond prices 

24 Bourses 


fixed Interest Mfcas 

24 Recent Issues, UK 


FT/S&P-A World tafleas 

33 Short-term Int rates 


FTSE Bold Mtoes Index 

32 US Interest rates 


Emarging Market bonds. 

24 World stock matete 



Chief price changes yesterday 


PARS writ 













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Cesp set for $10bn privatisation 

»“rrrL Brazilian electricity company to be sold off =tS.—- 

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11 Smwrt 405-05 

By Geoff Dyer In Sao Paulo 

Cesp. the Sfio Paulo electricity 
generation company which 
produces 17 per cent of Brazil’s 
energy, is likely to be sold off 
- as one business in a privatisa- 
tion which could be worth 
more than flObn. 

The state government had 
originally intended to divide 
Cesp into a number of compa- 
nies prior to privatisation, but 
it now plans to sell off the gen- 
eration business as nng unit In 
what could be one of the big- 
gest privatisations ever. 

"The tendency is for Cesp to 
be sold as one company." 
Andrea Matarazzo, the compa- 
ny's president, said in an inter- 
view. The state government is 

Intel in 
of Digital 
chip plant 

, By Louse Keftoe 
in San Francisco 

Intel, the world’s biggest 
chlpmaker, is expected to 
acquire a substantial portion 
of the semiconductor 
operations of Digital Eqnip^ 
ment, one of the largest US 
computer companies, in a deal 
aimed at settling a bitter dis- 
pute over microprocessor 

As part of the deal, Intel is 
expected to pay abont $650m 
for Digital's state-of-tbe-art 
semiconductor manufacturing 
plant in Hudson, Massachu- 
setts. The plant produces Digi- 
tal’s flagship Alpha micro- 
processors, used in its most 
powerful computer systems. 
Under the terms of the pact, 
Intel would produce Alpha 
microprocessors for sale to 
Digital on favourable terms. 
The latter is also expected to 
license its microprocessor 
patents to Intel and to with- 
draw a patent infringement 
lawsuit filed against Intel in 

Talks between the two com- 
panies are believed to have 
been under way since Digital 
filed the lawsuit. However, 
Intel yesterday would neither 
co nfi rm nor deny any settle- 
ment discussions. Digital, 
which had been seeking dam- 
ages that it estimated could 
ran to billions of dollars, also 
declined comment. 

In its lawsuit. Digital 
charged that .Intel had 
“wilfully and deliberately" 
nsed Digital’s patented 
technologies to boost the 
performance of Intel Pentium 

Intel vigorously denied the 
charges. However, the chip 
company had been reluctant 
to see the case go to court 
because the outcome of such 
complex litigation was not 

The settlement, which is 
believed to be in the final 
stages of negotiation, appears 
to benefit both companies. 
Intel could eliminate the risks 
and costs of litigation while 
also repairing its relationship 
with Digital, one of Intel's 
longest-standing customers. 

The agreement could also 
provide Digital, which has 
been struggling to achieve 
profitable growth, with a wel- 
come cash frnfnsitm. It could 
significantly reduce Digital’s 
manufacturing costs. 

Digital may also see the 
agreement as a way to unload 
the burden of developing its 
own microprocessors. 
Although high-performance 
Alpha chips have beat a cen- 
tral element of Digital's turn- 
around strategy, their com- 
mercial success has been 
limited. Digital already sells 
more computers based on 
Intel Pentium chips than on 
its own Alpha chips. 

However, any agreement 
between Intel and Digital is 
expected to be scrutinised by 
US anti-trust regulators. 

Last month the Federal ; 
Trade Commission launched a 
broad anti-trust investigation i 
of Intel- i 

Ironically, the FTC’s investi- 1 
gation appears to have been 
partly prompted by remarks i 
made by Robert Palmer, i 
Digital chairman and chief i 

executive. i 

In announcing the lawsuit 
in May, Mr Palmier charged i 
that Intel was attempting to i 
extend its “monopoly posi- ( 
tion" in personal computer 

mi croprocessors into high-per- < 

formance computing. 1 

expected to make a final deci- 
sion on the sale model over the 
next fortnight, he added. 

The sale of the Cesp genera- 
tion business would be the last 
stage of the privatisation of 
the company’s operations 
which starts next month with 
the auction of its 67.6 per cent 
stake of voting shares in 
CPFL. a distribution company, 
for a minimum price of 
R$2.1bn (Si.8bn). 

In December, Cesp plans to 
sell its three power generators 
on the River Pardo, and in Jan- 
uary it will sell its own distri- 
bution business. In April, it 

intends to auction its majority 
stake in Comgas, the state's 
gas distribution company. 

Analysts estimate that after 
the reduction In Cesp’s $12hn 
debt from these sales, the gen- 
eration business could be 
worth SlO-Sllbn, based on the 
prices paid in previous privati- 
sations in Latin America. 

Analysts said the state gov- 
ernment was interested in sell- 
ing Cesp’s generation as a sin- 
gle company because it wants 
to have the privatisation pro- 
cess completed before next 
October's state and national 
elections. Alexandre Fer- 

nandes, analyst at Bozano, 
Simonsen, a Rio deJaneiro 
investment bank, <a»ii the gov- 
ernment might get a higher 
price from selling the business 
as one company with a virtual 
state-wide monopoly, rather 
than as five businesses which 
would compete against each 

Cecilia Tam. analyst with 
Dresdner Kleinwort Benson, 
said the one-company model 
would be the easiest way of 
getting the private sector to 
take on the huge Porto Pri- 
tnavera power plant, which 
has yet to be completed and 

which has significantly over- 
run on costs. 

However, analysts cautioned 
that because of the size of the 
proposed company, it might be 
hard to find a number of buy- 
ers who bad the resources to 
bid for it. 

“They might still have to go 
back to the original sale plan” 
said one analyst. 

Cesp currently has installed 
capacity of nearly 10.00QMW 
and is responsible for 98 per 
cent of power generation in 
the state of Sdo Paulo, which 
consumes 14 per cent of the 
electricity produced in all of 
Latin America. The state gov- 
ernment and two b anks it con- 
trols own 86 per cent of Cesp’s 
voting shares. 

Shares rise for telecom sell-offs 

Italians and 
French rush to 

By Vincent Boland in London 

Shares in Telecom Italia rose 
sharply in early trading on the 
Mian stock exchange yester- 
day as Italy’s national operator 
began an investor roadshow to 
sell Europe’s biggest ever sec- 
ondary share offering. 

France Telecom shares, 
which can be traded on a grey 
market ahead of the com- 
pany’s flotation in Paris and 
New York on October 20, also 
rose after the government 
fixed the issue price for Its pri- 
vatisation at the top end of 

Telecom Italia's share price 
has more than doubled in the 
past 12 months. It rose a far- 
ther 2.8 per cent yesterday 
morning, brushing aside feazs 
of a political crisis over the 
future of welfare re fo rm talks. 
The shares lost ground later 
but still closed nearly 1 per 
cent higher at LU.010. 

The jump came despite a 
row about a potential conflict 
of interest on Telecom Italia's 
board involving AT&T, the US 
group, and Unisource, an inter- 
national telecoms alliance. 
Each bought 12 per cent of the 
company last month and were 
given board representation 
although they have not yet 
signed strategic agreements. 
The offer price for the Issue, 
which could raise up to SlObn, 
will be announced on October 

France Telecom shares were 
trading at FFr210/21L5, a sub- 
stantial premium to the level 
at which the company’s shares 
are to be sold to the public In 

Daminiqiie Stranss-Kahn revealed the extent of institutional bids for France Telecom Plain RauMn 

the country’s biggest privatisa- 
tion to date. Shares will be 
offered to institutional inves- 
tors at FFr187 and to retail 
investors at FFr182. Some 25m 
private Investors have already 
registered their interest, and 
institutions have so far bid for 
FFrSSObn ($59bn) worth of 
shares, according to Domini- 
que Strauss-Kahn, French 
ffaawrg minister . 

The issue price for France 
Telecom caused few surprises. 
“We had expected it to be at 
the high end of the range, 
which was conservatively 
pitched," a London-based tele- 
coms analyst said. At FFr187 a 

share, France Telecom will 
have a market value of 
FFrl87bn. Fund managers said 
the company's inclusion in the 
CAC-40 index of leading stocks 
on the Paris bourse accounted 
for much of the institutional 
demand for the shares. 

Shares in Portugal Telecom, 
in which the government is 
selling a 26 per cent stake later 
this month, fell slightly in line 
with a weaker share market in 
Lisbon caused by profit-taking 
alter a surge in recent weeks. 

The Issue price for the gov- 
ernment's third share sale Is to 
be announced tomorrow. 

Meanwhile, the Australian 

government yesterday 
restricted demand by stock- 
brokers for shares in Telstra, 
the national operator which is 
also being privatised this 
month, to 15-2 per cent of the 
total number of shares on 

John Fahey, finance minis- 
ter, said the move would 
ensure that retail investors - 
some 2.8m have already 
expressed interest in buying 
Telstra shares - would have 
access to a "significant propor- 
tion” of the Issue. 

Observer, Page 15 . 

Telecom Italia, Page 20 I 

Club Med 
to exploit 
strength of 
its name 

By Andrew Jack in Paris 

Club M6dlterranee, the French 
holiday village operator, will 
exploit its brand nam e to gen- 
erate business when it 
announces its new strategy at 
the start of next year. 

Philippe Bourguignon, the 
former head of Euro Disney 
appointed chairman in Febru- 
ary, says Chib Med has not 
made any money for the past 
five years, but he does not 
want to introduce a sudden 
change in one area until he 
has determined an overall 

He wants to develop the loy- 
alty of clients, providing ser- 
vices such as entertainment, 
sports and cafes throughout 
the year rather than simply 
during an annual holiday. “We 
are going to build the first 
company in Europe to be 
looked at as a brand." he says. 

He is ex amining partner- 
ships and other co mm ercial 
agreements with Club Med’s 
larger suppliers of food, sports 
equipment and other products. 
It is possible there will be co- 
branding with companies 
whose images are compatible 
with that of the Club. 

Mr Bourguignon dafeurtw the 
basic concepts of the company 
incl uding tVip importance of its 
staff (or gerttils orgamsatews), 
its conviviality, the abundance 
of food and the variety of 
sports. “The Club is a concept 
that works and has a real 
future,” he says. 

But he adds that Club Med is 
likely to provide some of its 
services more selectively 
rather than trying to maintain 
a comprehensive offer at each 
of Its 100 holiday villages 
around the world. 

“Club Med has tried to be 
everything for everyone,” he 
said. “You have to make 
choices.” Some activities may 
be concentrated in certain 
“centres of excellence”. 

Mr Bonrguignon's plan win 
consider ways to enhance 
value for money, attract a 
younger clientele and extend 
the holiday season. 

Developments are likely to 
come by increasing capacity at 
existing Clubs except in North 
America where future villages 
are planned. 

His comments came as Club 
Med this weekend revealed its 
latest village, in the beach 
resort of Varadero in Cuba. 

Mr Bourguignon said the 
Walt Disney Company had 
examined and rejected a pro- 
posal to take a minority stake 
in Club Med. 

Nichiei putting 
$470m of shares 
in foreign hands 

Dun & Bradstreet 

By GSBan Tett In Tokyo 

Nau Yoffc and Toronto prices « ttflo. 

Nichiei, one of Japan’s largest 
non-bank finance companies, 
is selling at least $470m worth 
of shares to US and European 
Investors in the largest inter- 
national offering ever made by 
a Japanese company. 

Though the amount is small 
In global terms, it is a record 
for Japan where companies 
have traditionally sold their 
shares in domestic markets. 

Nichiei has decided to target 
international investors alone 
and not issue in Japanese mar- 
kets at afl. This rare move by a 
Japanese company highlights 
the new interest among some 
companies in courting foreign 
investors, particularly because 
Japanese stock markets have 
recently bean weak. 

It also reflects advances that 
foreign investment banks are 
making in Japan; the Nichiei 
offering, which was lead man- 
aged by Union Bank of Swit- 
zerland, was the first Japanese 
equity offering to have been 
managed solely by a non-Japa- 
nese group. 

Mr Hiroshi Izawa, head of 
equity capital markets at UBS, 
said: "Japanese investors are a 
bit shy of investing in new 
stock right now, but there Is 
strong demand from foreign 
investors, so the company 
decided to target them 

Nichiei yesterday said it had 
chosen to raise capital in this 
way to meet “growing foreign 
demand" for its shares. 

Although initially a family- 
owned enterprise, the propor- 
tion of non-Japanese share 
ownership has risen during 
the last three years to over 25 

per cent, the company said. 

In recent weeks Nichiei has 
placed Y45.1bn of new shares 
and sold YlX8bn of family-held 
shares. A further YlLSbn of 
family shares are likely to be 
sold soon. 

Foreign interest in Nichiei 
has risen because It is per- 
ceived to be one of the few 
financial companies not 
weighed down with large bad 
lo ans, its shares, which were 
trading around Y5.000 three 
years ago, touched a peak of 
Y14^00 (Si 16) in August 

Interest in the company has 
grown because Its style of 
operations Is marfcprily differ, 
ent from Japanese banks: It 
tonrift primarily to small and 
medium-sized companies, 
extends loans of only six 
months and has stringent 
credit risk controls. 

With Japan's Big Bang 
finan cial deregulation loom- 
ing, the company is planning 
to expand its operations to 
compete with Japanese hanks. 
One aim behind the latest 
ahare offering is to become 
large enough to take advan- 
tage of planned reforms that 
would allow non-bank lenders 
to issue bands. 

One Western banker said: 
"Foreign investors are locking 
for companies that will benefit 
from Big Rang , but the hnnlra 
have so many problems that 
companies like Nichiei are 

The new issues, which repre- 
sented 4.6m shares, were 
almost twice over-subscribed. 
They were sold at Yli.270 a 
share, a 2 per cent discount to 
the previous day's closing. 

Brink of recession. Page 16 

“ The | 
D&B Rating^ 
an excellent 

of a business’ 
state of health** 

-To manage targe volumes ot customers, *0&B reports give ma key tacts on my cuslomere. 
antiopaa bad debts, secure payments and take But more than this, they give me the D&B Rating 
a proactive, professional approach to risk This Is an excellent indicator ot a busmess' stole 
assessmenl. l need id do much, much mere than of health which e datvered instantly. I rely on it 

MaJcotn CwSw 

Felon of tf» Jtetuufta of Greta 


look at figures". 

heavily whan takftg crectt decisions. 

For Information <m how D&B can help you, cafc 





WorldCom recruits ex-Sears chief 

By Alan Cane 

WorldCom, the US com pany at the 
heart of the biggest takeover bid in 
history, yesterday appointed one of 
the UK’s most controversial busi- 
nessmen to lead its interna tional 

Liam Strong. Irish-born former 
chief executive of Sears, the retail- 
ing group, becomes chief executive 
of WorldCom International, respon- 
sible for all the company’s 
operations outside North America. 

Mr Strong resigned from Sears in 
May following 18 months of criti- 
cism from investors and analysts 
over the group’s losses. 

WorldCom's international 
operations include fibre optic con- 
nections around Europe's principal 
financial centres linked by a pan- 
European backbone network. 

Mr Strong. 52, will have offices in 
London and Washington. He will 
work directly with Colin Williams, 
who had the dual role of chair- 
man and chief executive of the 

Mir Williams will continue to 
take responsibility for the divi- 
sion’s external relations, including 
its submarine cable ventures and 
Asia-Pacific strategy. Both men 
will report to John Sidgemore, 
chief operating officer. 

Yesterday Mr Sidgemore wel- 
comed Mr Strong; “The interna- 
tional business is at an important 
phase of its development and 
Liam’s skills and experience oper- 
ating complex, multinational, 
customer-oriented businesses will 
complement our proven abilities in 
network and business develop- 

Colleagues say that Mr Strong, a 
former marketing and operations 
director at British Airways, had 
been impressed by the similarities 
between the airTfrw> business and 
telecommunications, and that he 
believed his operational skills and 
experience of regulated industries 

would be valuable to a fast-growing 
organisation like WorldCom. 

Mr Strong held senior positions 
at Proctor and Gamble and at 
Reckitt and Coleman prior to mov- 
ing to BA. 

But his reputation took a bruis- 
ing during bis six years as chief 
executive at Sears, where growing 
losses led to the dismemberment of 
the Selfridges-toshoes concern. 

While accepting his personal 
charm and energy, critics accuse 
him of failing to live up to bis 
rhetoric, of endless changes of 
strategy and of an inability to work 
with other people. 

His supporters say he lacked the 

retailing background that could 
have ensured a surer touch 
at Sears and that he was 

WorldCom is the antithesis of 
the organisations Mr Strong has 
worked for to date. Virtually 
unkn own outside the US until its 
shock $30bn bid for MCI last week, 
it is fast growing and agile with a 
comparatively’ informal manage- 
ment style. 

Yesterday, British Telecommuni- 
cations, whose own bid for MCI has 
seemingly been sidelined by Worid- 
Com’s intervention, was waiting 
for MCTs response to the new bid 
before making clear its response. 

Bear Stearns clears decks 

Securities firm is to reduce its board from 39 members to nine 

B ear Steams, the US 
securities firm, has 
been listed on the 
New York Stock Exchange 
for 10 years, but has contin- 
ued to act more like a pri- 
vate partnership. That cul- 
ture may be changing. 

Yesterday, the firm 
announced a plan to reduce 
the size of its board from SB 
members to nin e — a move 
which will bring it more in 
line with other quoted com- 
panies. The firm had faced 
criticism for having a board 
which was too big and over- 
loaded with insiders. 

If shareholders approve 
the change at the company's 
annual meeting on October 
27, the board will soon have 
only two members who work 
for the firm: Alan Green- 
berg, known as “Ace", the 
chairman, and James Cayne, 
chief executive officer. 

The decision to trim back 
the board was taken when 
the management realised 
that, based on established 
practice, nine more Bear 
Stearns employees mi ght be 
due to join the board, 
expanding it to nearly 50. 

The manag ement decided 
this was “getting unwieldy”, 
said an officiaL While eligi- 
bility for the board has 
always been a “subjective” 
process, it has become an 
accepted way of rewarding 
staff who have performed 
well car risen to be in charge 
of a business area. 

The new structure will 
consist of a nine-person 
board of the parent com- 
pany. which will decide 
strategic issues, while the 
broker-dealer will have its 
own board of about 37 inter- 
nal members, which will 
deal with internal manage- 
ment decisions. 

However, there are ho 
plans to change the compa- 
ny’s unusual management 
pay structure. Bear Steams 
pays its senior managers low 
basic salaries - by Wall 
Street standards - of about 
$200,000. But it pays unusu- 
ally big bonuses. In its 1997 
financial year, Mr Greenberg 
and Mr Cayne earned $20m 
apiece, according to a com- 
pany proxy filed yesterday. 

About 40 per cent of the 
company’s stock is owned by 

employees, despite the firm’s 
avoidance of options as a 
form of remuneration. 
Instead, participants in a 
deferred compensation plan 
can invest up to 50 per emit 
of their pay in the compa- 
ny’s stock. 

It remains to be seen 
whether the chang**! to the 
board will bring other 
changes of culture to a firm 
which has produced consis- 
tently better returns than 
most an Wall Street - its 
return on equity was nearly 
28 per cent in 1997. 

In an. account of the com- 
pany’s culture written by a 
consulting firm it retained in 
1993, the structure of the 
firm was described as 
“organised chaos". 

The firm considers itself 
entrepreneurial, with “no 
organisation charts, no 
career paths”. It has some 
unusual quirks: employees 
are encouraged, with finan- 
cial incentives, to report on 
colleagues who misreport 
trading positions, and are 
treated to aphorisms from a 
fictitious character in end- 
less memos from Mr Green- 

berg, which were recently 
published in book form. 

But it has also faced some 
recent embarrassment over 
its relationship with a failed 
broker, AR Baron, through 
its profitable clearings busi- 
ness. Some suggest that its 
slogan “We dear just about 
everything for just about 
everybody" may have turned 
out to be only too true. 

Bear Stearns also faces the 
challenge of consolidation in 
the competitive environment 
for investment hanking. 

The firm is small com- 
pared with giants like Mer- 
rill Lynch and Morgan Stan- 
ley Dean Witter, and its 
business is almost entirely 
domestic. Though it has 12 
overseas offices, foreign rev- 
enues in 1997 totalled just 
over $500m, out of a total of 
more than $6bn. 

The firm has plans to 
expand overseas, but may 
lack the firepower, according 
to analysts. It could instead 
be acquired by a European 
bank keen to buQd a base in 
US markets, some believe. 

Tracy Corrigan James Cayne: retains his seat under the new structu r e 

Federal Express to acquire rival in $2.4bn deal 

By Richard Tomkins 
in New York 

Federal Express, the US 
express delivery company, 
yesterday embarked on a big 
expansion in the ground 
transport business by 
announcing an agreement to 
buy the Ohio-based Caliber 
System for $2.4bn in stock. 

The deal will greatly inten- 
sify the competition between 
Federal Express and United 
Parcel Service, the biggest' 
US package delivery com- 

pany, which suffered a two- 
week nation-wide strike this 

Caliber System sharehold- 
ers wifi receive 0B of a Fed- 
eral Express share for each 
existing share, valuing Cali- 
ber System’s shares at about 
$61% on the basis of Federal 
Express’s share price in 
early trading yesterday. 

Federal Express shares 
were down S2iV at $76U, 
while Caliber System shares 
rose $4%, or 8 per emit, to 

Caliber System, which had 
net profits of $9Jbn on reve- 
nues of $2.7bn last year, is in 
the surface transport busi- 
ness. Its TTratn operating sub- 
sidiary is RPS, a busmess-to- 
business, non -express pack- 
age carrier, and it also 
provides contract logistics 

Federal Express pioneered 
express package delivery in 
the US. taking a lead over 
UPS in this sector. UPS dom- 
inates traditional, non- 
urgent package deliveries, 

accounting for about 80 per 
cent of packages in this sec- 
tor, but it also o ff ers express 

Unlike UPS, which uses 
the same equipment and 
people to handle express and 
non-express packages. Fed- 
eral Express plans to keep 
them completely separate. 

It will form a holding com- 
pany called FDX, under 
which Federal Express, RPS, 
and Caliber’s other subsid- 
iaries will operate as inde- 
pendent entities. 

Frederick Smith. Federal 
Express chairman and chief 
executive, said Federal 
Express and Caliber believed 
the express and non-express 
markets were best served by 
highly focused , operating 
systems that met the specific 
demands of their customers, 
so Federal Express and the 
other companies would con- 
tinue to operate indepen- 

However, he said the FDX 
sales force would offer the 
full range of services offered 

by Federal Express and Cali- 
ber. “We think the FDX com- 
pany will be able to offer a 
broad-based-supply chain 
management solution to vir- 
tually any company that 
wants to use logistics and 
transportation as a strategic 
competitive weapon,” he 

Mr Smith said the com- 
bined entity would be able to 
provide a much broader 
range of services than any- 
thing the competition could 

On 25 September 1997 ar approximately 02:00 a siesroic event measuring 4,3 ou the Richter Scale occurred below the reef 
at No. 4 Sub-Vertical Shaft. The area served by the shaft coo tributes 47 pec cent of the mill tonnage. 

Limited damage was caused to the s roping horizons. Repairs have been completed to the shaft, shaft ore passes, and 
pumping arrangements. Good progress is being made in rectifying che damage ro the access haulages which were more 
severely affected. 

An assessment of che damage has revealed chat che mine should mill 170 OOO tons during October with normal 
production expected by mid-November 1997. The overall gold yield will decline marginally as access to some of the high 
grade stopes was affected by che siesroic evenc. 


6 October 1997 


Consolidated data 

In MflCoo FRF 

1st semester 


1st semester 




Turnover 1 1 ) 









Current result 





Net result after 
minorities (2) 





tl* 1st semester 1997 turnover is slightly higher to the 603 MF as announced on August 25, 1997. bearing In 
mind early July deliveries for Ukraine and Byelorussia which were delayed for Logistic Custom inspection 

This turnover includes 29 J MF coming from our branches in China. Byelorussia and Russia which were not 
included on June 30. 1996. 

(2) lit semester 1997 net result is calculated according to the new fiscal ride of 41 £6%. With a similar fiscal me. 
the result should raise at 93 MF. 

Turnover is totalizing 62.7 MF against 38 MF for the same period last year. Not profit after minorities 
totals 8.7 MF against 3.4 MF. 

Excellent sales forecasts: 

Given the seasonal factors, the 1st semester does not give the right image of our activity cm a full year 
period. On the other hand, given the up-coming dynamic growth of new marif*»c such as Ukraine, 

etc. a sharp increase is to be expected year-end and beginning of next year which n™*!*-* us to confirm that 
1997 net result will be far higher than original forecasts at the time of int ro d u ction. 

BELVEDERE up-grades the image of local white spirits production world- wide through a range of de hixe 
frosted and fixed -oo private mould bottles, such as Vodka (Eastern Europe). Sorgho (China), Ouzo 
(Greece). Arak (Lebanon), etc. and soon Tequila (Mexico). White Rom (Caribbean), Sake ad Scbocfan 

BELVEDERE has been listed on the French Nonveau Marcbfi since January 21 , 1997. 

Investor Relations: 

Jacques ROUVROY.TcL 1 0033 ■ 3 8022 93 83 
10, tue Charles Jaficlin - F 21200 Beaune - France 

Chemical Banking 

(Now Chase Manhattan 
Cor p ora tion) 

U.S. $200^00,000 
SiAonSnated Floating Rate 
Notes Due 2000 
ta accordance whft the pww te tans 
at the Notes, notice is hereby 
gtvsn that for the interest period 
from October 7, 1097 to January 7, 
1996 the Notes cany an interest 
rate of 5.9% per annum. 




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Alcoa ahead 
sharply in term 

By Nikki Taft 
in Chicago 

Alcoa, the largest of the US 
aluminium producers, yes- 
terday announced a sharp 
increase in third-quarter net 
profits, to $228. 1m. or $1.32 a 
share, from $68. 4m, or 39 
cents, in the same period of 

The result brought net 
profits for the first nine 
months to $594. 8m, or $3.43 a 
share, compared with 
$378,801, or $2.16, a year ear- 
lier. In the first nine months 
of 1996. Alcoa took one-off 
charges of $l05.5m to cover 
redundancies and the cost of 
closing ceramic packaging 

Revenues for the third 
quarter were slightly higher 
at $3.4bn. against $3.2bn in 
tbe third quarter of 1996, 
boosted by an increase in 
aluminium product ship- 

The Pittsburgh-based com- 
pany said it shipped about 
742,000 metric tonnes, up 
from 717,000 tonnes in tbe 
third quarter of 1996. 

Alcoa attributed the 
improved result to cost effi- 

ciencies and growth across 
its operations, saying that 
these benefits had out- 
weighed an overall decline 
in prices year-on-year. 

However, the third-quarter 
result fell slightly short of 
market expectations, and the 
shares slipped $'/» to $80% in 
early New York trading. 

Alcoa said comparisons 
between the two third quar- 
ters had been complicated by 
a number of one-off items. In 
the 1996 period, the figures 
were depressed by a special 
charge of $65 -5m after tax, 
and before this had stood at 
$133.9m, or 77 cents a share. 

In the third quarter of 
1997. by contrast, the com- 
pany benefited from a one- 
off gain of $i2.3m. or 7 cents 
a share, reflecting the sale of 
equity securities, although 
this was partly offset by a 
charge to the company’s 
environmental reserves. 

By marking certain alu- 
minium contracts to market, 
Alcoa also took a $2.6m gain, 
against a loss of $l6m in the 
third quarter of 1996. 

The group's interest bill 
also dipped, from $37 .4m to 


IBM loses out 
in Dutch sale 

The Dutch government yesterday selected Getronics, a 
domestic computer services group, over InterMtianal 
Bticinpss Machines as its favoured parent for tuxcaae, m e 
former state computing centre which is bang privati se d. 
The US multinational was among a string of foreign 
maid on technology groups to have shown interest and had 
stayed the coarse after others such as Debis, part of Ger- 
many’s Daimler^enz group, had dropped out 

While IBM «aid it was disappointed, the intenor minte- 
try Raid the decision was based on an assessment of the 
business plans for Roccade submitted by the two bidders, 
as well as their indicated offer price. The value of t he , 
H«>i on which Getronics will now enter exclusive negotia- 
tions, was not disclosed. 

Roccade had net profits last year of Fl».7m ($M^m) an 
sales of FI 656m. Two years ago, it and Getronics agreed 
on the joint takeover of RaeL another Dutch technology 
company, but Getronics moved to full control last Decem- 
ber after the Roccade privatisation was delayed. 

Gordon Cramh, Amsterdam 


Lucent rejigs top management 

Lucent Technologies, the telecommunications equipment 
supplier, has given Richard McGinn, its president and 
chief operating officer, the additional post of chief execu- 
tive officer, effective immediately. 

Mr McGinn, 51, succeeds Henry Schacht, 63, who will 
continue as rihairynan, the company said. It said the 
/-hang ** “am part our plana in a seamless management 
transition”, and noted that both Mr McGinn and Mr 
Schacht led the company at its creation, following its . 
spin-off from AT&T two years ago. 

Mr McGinn was executive vicepresident of AT&T and 
president and chief executive of AT&T’s network systems 
group. Reuters. Murray SOI, New Jersey 


Tricon heads for NYSE debut " : 

Shares in Tricon, the new owner of the Pizza Hut, Taco \ - 
Bell and KFC fast food chains, start trading an the New 
York Stock Exchange under the stock market, symbol . . 
YUM today. Based on yesterday’s grey market price of _ ; 
about $32%, the company looks set to make its debut with 
a market capitalisation of about $4J3bn. . 

Tricon has come into existence following PepsiCo's deci- 
sion in January to spin off its fast-food operations and 
focus instead on its soft drink and soadt businesses. 
Investors had been pressing PepsiCo to dispose of the res- 
taurant division because it was a drag on profits. ' 

Tricon is the world's biggest restaurant company in - 
forms of units, but falls behind McDonald’s in terms of 
revenue. It has 30,000 Pizza Hut, Taco Bell and KFC units 
in 95 countries, with total retail sales of more than $20hn. 
But its stock market listing comes at a time when fast- 
food operators have been suffering from intense competi- 
tion in the US mar ket, causing McDonald’s to stumble. 

Richard Tomkins, New York 


Ahmanson to buy Coast Savings 

ILF. Ahmanson & Co. parent of Home Savings of America, 
signed a definitive agreement to acquire Coast Savings 
Financial, parent company of Coast-Federal Bank, for' ; 
about $901m, or $46.17 a sham It will also pay certificates 
representing the right to receive all cash awards from 
Coast's “goodwill” litigation against the US governmenti 

Coast Savings shares closed ou Friday at $54 a share, 
while Ahmanson shares closed at $57,125 in New York 
Stock Exchange composite trading. 

Under the agreement. Coast Savings’ shareholders will 
receive (L8082 Ahmanson common shares for each Coast 
share held. In addition, they will receive rights for all net 
proceeds in connection with thrift-related lawsuits 
against the US government over supervisory goodwill rule 
changes made in 1988. 

Ahmans on said the t ransa ction would be immediately 
accretive to earnings while preserving the ability to con- 
tinue repurchasing shares. AP-DJ, Jrwmdale, California 


Sky Latin America names chief 

Sky Latin America said has named Mark. Gol dman presi- 
dent and chief operating officer. The company Is an alli- 
ance between Brazil's Globo, Mexico's Grupo Televisa, 
News Corp and TCI International, and provides direct sat- 
ellite television service to homes. 

Mr Goldman joined News Corp in 1995 to manage its 
investment in a partnership with Globo, Televisa arid TCI 
International that evolved into Sky Tjttin America, the 
company said. He replaces David Evans, president and 
chief executive officer, who left the partniarship to join 
TCI International. Reuters . Miami 


Dean Foods denies vegetable exit 

Howard Dean, chairm a n of Dean Foods, which owns the . 
Birds Eye brand, said his company had no intention of 
getting out of the vegetable business, although it was ;• 
wei gh i ng options for both its canned and frozen vegetable 
products. ’’We’re definitely not getting out of vegetables, 
either canned or frozen,” Mr Dean said. “But we're 
looking at all kinds of opportunities, which would ineinffc 
more outsourcing." 

Mr Dean said his company was still looking at options : 
for frozen and canned vegetables. “Do we increase or 
decrease the amount of business we do," the chair man 
said. "Do we push private label or do we push branded? 

All these questions are things ti-mt. we’re examining." - 

Rasters, Chicago 

Comments and press releases about international 
companies coverage can be sent by email to 

Warning hits Silicon Graphics 

By Nicholas Denton 
in San Francisco 

Shares of Silicon Graphics, 
the maker of the powerful 
computer workstations used 
to create special effects for 
films such as Jurassic Park. 
lost one-third of their value 
in early New York trading 
yesterday after the group 
issued a profit warning. 

The shares fell $815 to 
$175* as investors reacted to 
news that Silicon Graphics 
expected to lose about 20 
cents a share in the first 
quarter, rather than achiev- 
ing earnings of 21 cents a 

This loss does not include 
charges incurred from the 
acquisition of ParaGraph 

International, an internet 
software company. 

The computer maker said 
first-quarter sales would be 
about 8760m, compared with 
$765m in the same quarter 
last year, leading investment 
banks such as Merrill Lynch 
to temper their recommenda- 
tions on the stock. 

The announcement raised . 
questions among analysts 
about Silicon Graphics' abil- 
ity to gauge demand, and 
underlined doubts about its 
ability to withstand competi- 
tion from rival manufactur- 
ers aligned with Microsoft, 
the dominant software 

Silicon Graphics' Septem- 
ber quarter is typically its 
weakest - a feet that it said 

it had anticipated. But It did 
not appreciate the extani to 
which the strong June quar- 
ter had been exceptional 

Analysts said this was tbe 
latest in a series of factors 
which the company, once 
one of Silicon Valley's most 
admired high-technology 
groups, has used over the 
past two years to explain dis- 
appointing earnings 

"This is basically an 
'excuse' stock," said Daniel 
Kunstler, an analyst at 
J J. Morgan, the US invest- 
ment bank. 

“One quarter after 
another, they have talked 
about this transition and 
that transition. While all 
this might be true, it looks 
rather chronic." 

Silicon Graphics' difficulty 
is that its traditional mar-, 
kets. the engineering and 
special effects companies 
which rely oh its powerful. 
machines to create complex 
diagrams . and three-.- 
dimensional images, are- 

Forrelatively staple apph^ 
cations, the latest computers ■ 
from companies, such- as 
Compaq and Hewlett Pack- 
ard, operated by Microsoft's* 
Windows NT system .soft- 1 
ware, present an economic ^ 
alternative to SflJcon Gaajih- ' 
Ics’ specialised machuiesL : , 

Silicon Graphics, i-n’i 
response, has " itself ijjeen. : 
expanding into ite wnnpetir;; - 
tors’ markets by developing •• 
sft'ver computers. 





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Oppenheimer connection continues at De 

DfiS!S De Beers 

I C 

Pr®’- 7 ' 

D iamonds. De Beers 
and the Oppen- 
henners are instri- 
cably linked. For 100 yeare. 
De Beers has dominated the 
world's dia mon d business. In 
the past 68 years, the South 
African. group has. had only 
three 'chairman; two of t h^ 
were Oppeoheimers. 

Now another Oppenheimer 
is about to move into the 
c h airma n ship to reinforce 
the family connection in 

what many stm see as a fem- 

fly company. Nicky Oppen- 
heima 1 . SSL, takes over at the 
end of this year. 

Micky’s grandfather. Sir 
Ernest, was chairman from 
1929 untQ bis death in 1967 
and was succeeded by his 
son - Nicky’s father - 
Harry, who retired in 1982. 
The Oppenb earners accumu- 
lated a vast fortune from 
gold and platinum, as well 
as diamonds. Sir Ernest 
founded the Anglo American 
Corporation in 1917 and he 
and Harry built it into South 
Africa’s biggest corporation. 

Anglo is indivisible from 
De Beers. Each is, in effect, 
the leading shareholder in 
the other, making them 
impregnable to corporate 

The Oppenheimers wield 
their extraordinary influence 
from a small shareholding: 
about 8 per cent of Anglo 
However, they have always 

carefully selected boards of 
'Erectors loyal to the family. 

In these circumstances, it 
is not surprising that Nicky 
Oppenheimer'8 promotion 
should have revived those 
myths Which have plagued 
him for years: it is widely 
believed he Is reluctantly 
ta ki n g a role in the group 
out of loyalty to his father, 
now 68, and that he is not up 
to the job of running a big 

He rejects the first sugges- 
tion. “I absolutely relish the 
challenge," he says with a 
broad grim 

De Beers controls the 
global rough, or uncut, dia- 
mond business through its 
London-based Central Sell- 
ing Orga n isation, which bas 
exclusive marketing con- 
tracts with most of the 
world's important gem dia- 
mond producers. But there 
have been several develop- 
ments in the past yean 

• The Argyle mine in Aus- 
tralia, in volume terms the 
world’s biggest producer, 
has quit the CSO; 

• The CSO has severed for- 
mal links with Russia, 
another big producer; 

• Two potential rivals - 
BHP. Australia's biggest 
company, and Rio Unto, the 
largest mining group in the 
world - will soon start dia- 
mond mining in Canada. 

As for the suggestion that 

&!%for NYSE debut international news digest 

||S; S 3 Glaridge Israel to 

- lift Koor stake 

C lari d g e Israel, the investment company controlled by 
Charles Bronfman of Canada, yesterday said it h«h 
decided to exercise an option to purchase an a dd itional 
10.2 per cent of Koor Industries, Israel’s biggest holding 
company, from Shamrock Holdings of the US for $l87m. 

Last July, Claridge purchased 102 per cent of Soar from 
Shamrock for 8187m. and acquired a 90-day option to buy 
the remainder of Shamrock's stake. By exercising the 
option, Claridge secures control of Koor with a 24 per cent 
stake in the concern, including shares it had acquired 
elsewhere. Bank Hapoalim, Israel’s bi gg est banking 
group, holds 23 per cent of Koor. 

Claridge also said that McKinsey, the consultancy firm, 
was in the final stages of completing its due diligence of 
Koor on behalf of Claridge. 

Earlier this week. Israel's antitrust authority approved 
Claridge’s acquisition of Koor. However, the authority set 
conditions aimed at preventing cross-holdings and safe- 
guardmg competition in certain sectors ip which Clar- 
idge’s current holdings overlap with Root's. 

- Am Machlis, Jerusalem 


Move to agree deal with creditors 

Shares in German machinery maker Eoeckner-Werke 
jumped mare than 10 per cent yesterday, closing DM10JJG 
higher at DM133, as the market hailed the company’s 
attempt to strike a deed with its creditors, dealers said. 

The company offered creditors a cash sum to dissolve a 
debt settlement which it said would have left its lenders 
empty-handed. . 

Kloeckner-Werke, which made a deal in 1993 to restruc- 
ture its DM2.7bn ($1^3bn) debt, said it was offering credi- 
tors DM22. 6m to dissolve the repayment deal- The com- 
pany said the debt restructuring, in which creditors gave 
up ha l f of their ciatmw against Kloeckner, had foreseen 
repayments of poe-third of net profits earned up to the 
business year ending September 30 2000. But heavy losses 
in 1994 and 1995 mean that, under the terms of the deal, 
creditors would not see any money. Kloeckner said. 

> Reuters, Frankfurt 


Fairfax, Dow Jones online venture 

John Fairfax, the Australian newspaper group, has 
entered a joint venture with Dow Jones, the US media 
group, to run an online business research service. The 
service, Dow Janes Interactive-Fairfax Australia/New Zea- 
land edition, will have more than 70m articles from more 
than 4,000 magazines , newspapers and newswires. 

It will be the exclusive combined source in Australia 
and New Zealand of the global editions of the The Wall 
Street Journal, The Australian Financial Review, Far 
Eastern' Economic Review, BRW Magazine, the Dow Jones 
Australia and New Zealand Report, The New York Times, 
the Financial Times and Personal Investment magazine, 
the companies said. 

The full text of the Sydney Morning Herald, The (Mel- 
bourne) Age, The Sun Herald, The IDawarra Mercury, The 
Newcastle Herald and The Warmambool Standard would 
also be available on the business research and news-alert- 
ing service, they added. 

The software version of the edition would be released 
later this year, as would be a customised version of the 
Dow Jones News/Retrieval software. An internet-based 

version of the service is planned. Reuters, Sydney 


Outokumpu upbeat as profits leap 

Outokumpu, the Finnish metals and mining group, 
reoorted a Jeap in profits after financial items in the eight 
mouthsto August to FMlbn <|189m), from FMltBm last 

^Group sales rose from FMllbn to wMe oper- 

ating profits were up at FM1^5hn, compared with 
FM331m in the same period last year. Earnings per share 

rose from FM4J0 to FM5. 74. 

The company said the outlook for the aorta« ™ 
favourable, although there was some uncert ainty over the 
pricedevdopment of some products. This 

related mainly to copper and stainless steeL Outokumpu 

said, without elaborating. 

The earnings improvement was largely the result ^ 
zinc pifoeincreasas* the stronger dollar and better cost 
efficiency in the base metals division. 

Strong economic growth helped increase the consump- 
tion of both base metals and stainless steel, the company 


The group’s operating profit indudes an inv mtorgra 
of FM22Sm, compared with an 
year earlier. 

Pre-tax profit pbn) 
2 £ 

Yet one of the CSO’s main 
tasks is to ensure that rough 
diamond prices do not fall 
sharply but remain rela- 
tively stable. It does so by 
operating a buffer stock, fin- 
ancing a stockpile when the 
market is over-supplied with 
certain types of diamonds 
and releasing them when 
demand builds up a gain. 

M r Oppenheimer 
insists the CSO 
could not adopt its 
traditional stance and bold 
prices steady, thereby allow- 
ing Argyle to eat into its 
share of the “Indian" mar- 
ket. “That would have been 
commercial nonsense.” 

He suggests the industry 
wants the CSO to continue 
smoothing out the peaks and 
troughs in diamond demand, 
but too many producers do 
not want to pay their full 
dues to the marketing 
“club”. He is keen to bring 
Argyle back to the CSO. and 
wants to sign a new contract 
with Russia - but not at any 

Contacts have also been 
made with the new diamond 
producers. BHP and Rio 
Tinto, but bringing them 
into the CSO’s fold might 
prove tricky. Both groups 
have substantial operations 
in the US. where the anti- 
trust authorities take a dim 
view of what they see as the 

Source: Rouas 

he is not up to the job, 
Mr Oppenheimer points out 
that the directors of a big 
public company - De Beers 
has a market value of about 
$13bn - would be unlik ely to 
invite him to take such an 
exposed role If that was the 
case. He grew up in the dia- 
mond business and as chair- 
man since 1985, he has 
helped steer the CSO 

through some turbulent 

He is no pushover when 
negotiating for the CSO. 
When negotiations with Rus- 
sia dragged on, delayed by 
bureaucracy and politics. De 
Beers continued for a year to 
buy Russian diamonds under 
the terms of a previous con- 
tract But Mr Oppenheimer 
ended the agreement when 

Nicholas I 
Opponhermer I 

he felt the Russians were not 
respecting the old contract 
When the Argyle mine 
quit the CSO, saying it could 
do better on its own, De 
Beers was quick to respond. 
Prices of small diamonds - 
the type that account for 
most of Argyle ’s output and 
are mainl y bought by Indian 
diamond cutters - fell 
steeply as a result 


De Beers' diamond cartel. 
Hus prevents De Beers hav- 
ing a physical presence in 
the world’s biggest diamond 
retailing market 

Even if the antitrust com- 
plications can be overcome, 
some analysts suggest BHP 
and Rio will want a bigger 
say in CSO strategy and rep- 
resentation on the board 
before they sign up. Mr 
Oppenheimer opposes this, 
arguing it would convert the 
CSO into a producers’ cartel 
and, he insists, "cartels do 
not work - look at Opec". 

It is up to the CSO to con- 
vince producers that its "sin- 
gle channel” system, where 
it is responsible for market- 
ing most of the world's gem 
diamonds, can do a better 
job than the prodcuers. 

“In general terms the dia- 
mond business is looking 
forward to a prosperous 
future,” as more people are 
becoming rich enough to 
buy diamonds. Mr Oppen- 
heimer insists. 

He dismisses the widely- 
held idea that there will be 
shortages of gem diamond at 
the beginning of the next 
century. Instead, tbe CSO 
will ensure it is business as 
usual, using price increases 
and encouraging increased 
output to ensure tbe market 
remains close to balance. 

Kenneth Gooding 

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ICI deal 

By Emma Tucker in Brussels 

The acquisition by DuPont, 
the US chemicals group, of 
the polyester and European 
titanium dioxide businesses 
of Imperial Chemical Indus- 
tries, of the UK, was 
approved without conditions 
by the European Commis- 
sion yesterday. 

The decision will help ICI 
move ahead with further 
planned disposals, such as 
tbe sale of its US titanium 
dioxide plant. It was reluc- 
tant to sell this while there 
was a risk of the DuPont 
deal falling through. 

Brussels concluded that 
the $3bn deal, announced in 
July, would not lead to tbe 
creation or strengthening of 
a dominant position in the 
European Union, even 
though it would reinforce 
DuPont's position as market 
leader in titanium dioxide. 

The Commission was reas- 
sured by the fact that the 
merged parties would still 
be confronted by a number 
of world-wide competitors 
for the white pigment, 
including Kronos. Millen- 
nium. Kemira, Bayer, and 

World Power. 

...» — - — . 1 ' ■ r- 1 ^ * 1,l j - S * 1 » * 1 . J f - w ' . j i»i M i "* iiii> i «ii i ' ! 4 wiii i i*** 

■ 'vx- - - *. - : *. .» •. - A x. . .... .... 

”•*•• :** - •- * \ . *»: **y?**f* ~\ .■ /... •••*• ' ••>. . 

_ "7 . r . •• ^ . *• '*■*. • •■*•■••• 

TTt\CTEBEL has taken important strides as part of its strategy of building a global energy 
and environmental serv ices business on tbe foundations of a strong domestic base. 

• Strong growth in the first half of 199"?- 

« Merger with POWTRFIN completed. 

• 5-to-l share split. Free float of shares increased from 

33^0 to l9-h"o. 

TRACTEBEL is now the sixth largest independent 
power producer in the world. 

• tuskncthk 1 ?:! P”U\-r h'O’X'i! i;;iy 

TR.\CI FBFL actually supplies more than 

25.000 megaw atts of electricity tt> customers worldwide. 

“TRACTEBEL pursued successfully its strategy of international expansion on 
the foundations of a financially strong domestic base. The merger with 
FOWERF1N streamlines our organisation, increases the liquidity of our shares, 
and will help to raise TRACTEBEL’s profile on the international stage. The 
new articles of association approved in June secure the respect of the 
interests of all shareholders, small and large alike, allowing us to look to 
the future with even greater confidence. The second half of this year has 
started well.” 

Baron Philippe Bodson, Chief Executive Officer 

For i. cupy ci ihc Interim Bepcri, Hew conUfl: Conunufiicsiiom Dcjn.. fT.l.t. Tmcwbd, l, pb<e du Trine, B-1000 BruiucL. Udjuitm. 
Tel: +iU! 2 Slo 7! 1 1 Fa»- *32 2 510 73 88. 

Hair-year eonsofidated muKs six months ended 30 June 1997 

Nat result TBLIb atnre 


30.0G36 pro loma" 
















In USD- 



i Net result per share 

■Alta absuptioA of POM^hHN by TRACIEhEl and idler dmnom n the consoHdaOon 
methods tor MGEN.T)BSAan(UnDRM. GAS. ~W a nse of 1USO=38.75 BEF. 



Comments and press releases aoom uuerraMJ 

companies coverage am be sent by e-nurd to 



Solar expansion 
planned by Shell 

Royal Dotcb/ShelL, the oil group, is to unveil plans by the 
end of this year to invest $250m in renewable energy, with 
the aim of taking 10 per cent of the world solar energy 
market by 2005. 

The Anglo-Dutch group said it was still flnaiirfng 
details of a “fifth core business” it planned to create 
around renewable energy, at a time of increasing suspi- 
cions that fossil fuel consumption may be contributing to 
global warming. 

Shell appears to be seeking to rival British Petroleum, 
which last May announced plats to increase its sales of 
solar energy equipment from $100m to $lbn a year over 
the next decade. The group’s Dutch-based Shell Solar 
Energy subsidiary on Friday announced plans to invest 
$3 .25m in expanding its solar panel manufacturing capac- 
ity in the Netherlands. It also said it planned to employ 
170 people by 1998, up from 36 at the beginning of this 
year. Leyla Boulton, Environment Correspondent 


Swiss carriers target EU market 

Two new airlines are being launched in Switzerland. Cros- 
sair. Swissair’s regional carrier, is setting up Europe Con- 
tinental Airways in France to help it break into Europe's 
single aviation market Crossair is taking a 35 per cent 
stake in the new airline, which will operate from EuroAir- 
port Basel Mulhouse Freiburg. Crossair’s headq ua r ter s. 

Its investment in ECA follows Swissair’s decision to take 
control of Sabena, the loss-making Belgian airline. ECA 
will begin flying in spring 1998 with a fleet of Saab 340 

Meanwhile, Swiss World Airways, backed by several 
cantonal governments in French-speaking Switzerland, 
said yesterday that it would start operating in early 
December with two Boeing 767s, flying between Geneva 
and New York. 

Both moves are designed to help the Swiss carriers 
overcome the disadvantages of being based outside the 
European Union. William Hall, Zurich 


Neste declines to match Dyno bid 

Finnish oil and chemicals group Neste said a bid by Nor- 
way’s Dyno Industries to take a majority of Krems 
Cbemie was unlikely to succeed, blit that Neste would not 
raise its own bid for the Austrian company. 

Dyno last week offered Sch720 a share for Krems, an 
Austrian maker of adhesive resins, after Neste had 
matched Dyno’s earlier Sch650 bid. upping its initial offer 
of Sch585 a share. Reuters, Helsinki 


ETHNIKI KEPHALEOU S.A.. Administration of Assets and Uabffltiss, of 8a 
CltryiisospfilaUssJs Str., Athens 10560, Greece, to its capacity as Liquidator of 
| ‘P.RAPAMAKiS BROS SA*. a company with Its registered office in Athena, 

! Greece, (the -Company*}, presently inter special Hqirfdafion accanfng 10 the 
pRivMons of Article 46a of Law 1892/1990. by virtue of Decision 2148/173.1997 
d the Athens Court of Appeal 

announces a call for tenders 
tor (he sale of the assets, as single entity, of the co m p an y desorbed below. 

The Company was established to 1981 and became a SA in 1964. Its activities 
Include the Importation and standardization of fresh and frozen meet and fish. On 
17.3.1997 the Company was placed under special Bquldatioa 

1. A plant to Lakka- Hard (11. Homos St) the area of wNdi amounts to 22272 
sq.m, approximately, located outside the city planning area. This includes 
btfdngs the total area of which amounts to 6,819 sq.m, appro x i mate ly and k Is 
leased to *RAPANAK1S BROS LTD* until 2003, although the vafidity of the lease 
Is being challenged. Legal proceedings are parsing. 

2. Two adjototog plots of land on the New Athens-Cortoth National Road, the total 
area ol which amounts 29.500 sq-m. approx., inducting an old bursting and a 
chimney. These are to be included to the chy pfarmtog area. 

The assets being sold also tocfude the company's registered name as weti as any 
other Ham betongtog to it The Company's machinery and vehicles have been 
sold to 'RAPANAKIS LTD", although validity of the sale contract Is being 
challenged. Legal proceedings are pendng. 


The Company's assets wil be sold by way of Pubic Auction to a ccord an ce with 
the provisions ol Article 46a of Law 1892/1990, (as supplemented by art.14 of 
L2000/1991 and subsequently amended) and the terms set out In the cati tor 
tenders far tin sale of the above assets, to be published in the Greek and foreign 
press on the dates provided by law. 


Interested parties may obtain the Offering Memorandum In respect of the 
Company and «s assets upon siting a Confidentiality Apeement 

1. The Auction shall take place to accor da nc e wrtth the pravtekxvs of anktie 46a of 
Law 1990/1990 (as supplemented by aiticte 14 ol Law 200QI91 and subsequent^ 
amended), the terms and conditions set forth herein and the Terms and 
Condtfons of Sale* conta in ed In the Offering Memorantfcxn. Such provisions and 
other terms and conditions shall apply Irrespectively of whether they are 
mentioned herein or not Submission of btotfng offers shaS mean acceptance of 
such provisions and other terms and conditions. 

2. Bindna Offsty. Interested parties are hereby invited to submit binding offers, 
not later than Mondsv. Nonrambw 3rd. 1997. 12.00 hours to the Athens, Nottsy 
Public Mr Georgs Stefanakos, 39, Ataxtimtas St Athens Tel: *30-1-6450422, Fax 
No. *30-1-6450-423. 

Offers should expressly state the ottered price and the dststied terms of payment 
(to cash or Instalments, mentioning the number of tostabnents, the dates thereof 
end the pro p os e d amual Interest rate, H any). In the event of .not specifying: a) 
the way of payment, b) whether the credtosd amount shaB beer Interest and c) tin 
Interest rate, then It sheti respectively be deemed that a) the offered prtoe to 
payable ipon execution of the sale contract b) fhe amount credffad shad bear no 
Interest and c) interest raw shall be tin legal ran In toroe from time to time. In an 
cases where the cretfted amount bears Interest, this shall be calculated in 
relation to the outstanding amount and shell be payable on the dales of payment 
of each Instalment Binding offers submitted later than the above data shall 
neither be accepted nor considered. The offers shall be binding until the 
atQudcation. Submission of offers in favour of a third party to be nomtoafatf at s 
tetw stage ahaB be accepted under the oondtionthaJ express mention Is made to 
this respect upon submisaton and that tin offeror sheB give a personal guarantee 
to favour of such tftird party tor the complfance of the obBgations deriving from the , 
sale contract. 

3. LflilBf5..gL9uaraiBM; Btoc«ng offers must be accompanied by a Latter ol 
Guarantee Issued to accordance with the sample Letter of Guarantee contained 
In the Offering Memorandum, by a bank tegaly upe rattn g In Greece, to remain 
valid urkt the artfrxflcatoa The amount of the Lenar of Guarantee rwst be QR5. 
ONE HUNDRED MILLION (100.000.000.-). Letters of Guarantee Bhaff be 
reamed after the adjudication. 

4. Subml Ba to n s : Binding offers together with tin Letters of Guarantee shaft be 
submitted to sealed opaque envelopes. 

6. Envelopes containing the Uncling offers shall be unsealed by the above 
mentioned Notary Pufarfc bi hb office, on Monday, November 3rd, 1997, 14.00 
hours. Any party hatting duly sttomtoed a bindtog offer ehal be entitled to attend 
and sign the deed aoeodng me unseating of the binding offers. 

6. As highest bidden shall be considered the participant, whose offer wfff be 
Judged by a eOWor a representing over 61 % of the claims against the Company 
(the 'Creditors’}, upon recommendation by the Liquidator, to be in the best 
Irasraste of sfl the credttors of the Corrpeny. For the purposes of evaluation, an 
ctiler to be paid In sistatowms shal be assessed rat trie basis of Its present vatoe 
to be ca ta tia wri by enploylng a 1S% annual dbcours Interest rate. 

7. The Liquid at or shal give written notice to the highest bidder s> appear on tin 
date and placa mentio ned therein and execute the coiteaa cl sale to a cc or dance 
wtth the tame contained In his bhdhg offer and/or any other Improved tens, 
which may be mggested by the Creditors and agreed upon. In tite event of the 
highest bidder not coopering with such obligation, the Letter of Gusarttee shall 
be forfeited as a penalty. AdjucBeaUon shall be deemed to take effect upon 
execution of the contrast of sale. 

9. All costa and expanses of any nature, including any rax (such as vat.), 
duties, cusum tkjtfes. any (targes In favour ol the state or thkd parties, which 
may need to be paid (other than those exempted by the appicotJe tew) in reaped 

o< the peiUdpafion to me Auction and the transfer o! me assets ottered hereby far 
sale, the sale contract, as wail as any other act prior or subsequent id tire transfer 
of easels shal be exclusively bonne by the purchaser 

9. The Liquidator and the Creditors shall have no liability nor obligation 
whatsoever towaids the partidparks In rotation to the evaluation ol the offers or 
the uppuk it nw nt of the highest bidder or any decision to repeat or cancel the 
Auction or any decision whatsoever In connection with the proceedings of the 
Auction. The Liquidator or the Credttors shall have no tebSry tar tny leg* or 
actual defects of the asses. Submission of bfncSng offers snail not create any 
rigid far the judicatio n nor the participants shall ecquks any right, power or 
claim from this Call andfar their psrtdpason to the Auction against tite Liquidator 

andtalhe Creators tor any reason whatsoever. 

10. ThteCalfasbeen<*Bftedln Greek and tranteated Into Englsh. bi any event, 
the Greek version shal pranri. 

In order to obtain a copy ol the Offering Memorandum and any farther information 
please contact the Uqifctotor ttimW Kephaleou SA. Admtn teu atton of Assets 
and Liabilities'. 8a Chryssospffiorisals Si Athens 10560 , Greece. Tel.: +30-1- 
323.1464-7, fax.: *30-1-321 .79.05 (altertiion d Mra. Marta Frangafcfa). 




ICB Shipping fends off Frontline bid 

. .s . -Ben 4C*n D.chorOC 1 

By Tim Burt 
in Stockho lm 

ICB Shipping, the Swedish tank-p r 
operator, yesterday said it bad suc- 
ceeded In frustrating a SKr3-22bn 
($428m) hostile takeover bid from 
Frontline, its Bermuda-based rival, 
by winning shareholder support for 
an alternative $309m merger with. 
Astro Tankers, of Greece. 

The Stockholm-listed group con- 
firmed that Investors holding 52 
per cent of its voting righ ts had 
given irrevocable undertakings to 
accept the proposed merger wtth 
privately-owned Astro, thereby pre- 
venting Frontline from proceeding 

with its hostile offer. 

But Frontline, which has 
acquired 51.7 per cent of iCB’s 
share capital and 3L4 per cent of 
the voting rights, warned It could 
use Us stake to block any future 
share issue by the enlarged 

Although it declined to say 
whether it was withdrawing its 
bid, the company said yesterday it 
would remain the largest single 
shareholder in ICB, and could 
therefore seek an influence over 
future strategy. 

“We win not co-operate in any 
fund raising in which ICB tries 
to issue new shares,” said Tom Jeb- 

sen. Frontline chief financial offi- 
cer. "That could force the board to 
consult us on their plans." 

He hinted that Frontline - 
headed by Norwegian shipping 
entrepreneur John Fredriksen - 
might seek taika with ICB and 

These would be »1 t««i at forming 
a single shipping group, which 
would be the world's largest inde- 
pendent tanker operator. 

Advisers acting for ICB. never- 
theless. rejected that suggestion. 

They predicted that the merger 
with Astro Tankers, the shipping 
vehicle of the Angelicoussis family, 
would encourage Frontline to sell 

ICB shares acquired during the 
takeover battle. 

That merger is likely to proceed 
following an extraordinary general 
meeting to be held later this 
month, at which the deal will be 
put to shareho lders. 

ICB ensured it would receive the 
support necessary to consummate 
the merger by persuading John 
Angelicoussis - chairman of Ange- 
licoussis Group, Astro’s parent 
tvwitpany — to acquire 10.2 per cent 
of ICB’s voting rights. 

Mr Angelicoussis, who will 
become chief executive of the 
enlarged company, acquired more 
than 474,000 ICB A-shares and a 

further 412.460 B-shares for^ah 
undisclosed sum at the end of test 
week. That enabled ICB to claim 
victory over Frontline. 

The Bermuda-based company, 
acquired last year by Mr Fredrik- 
sen for $455m. said previously it 
would ahP T1 d nn the bid -if the Astro 
deal went through. ?•.. 

ICB's voting A shares - closed 
down SKrl4 at SKrl35. white ite 
most commonly traded B shares 
fell SKrl to SKrllO. ' ---/ 

Frontline's Oslo-quoted shores' 
fell NKIO20 to NKrST.lO. 

Observer, Page IE 

AT&T and Unisource given one seat each before negotiations are completed 

Possible conflict over 

By Paid Betts 
in Mian 

A potential conflict of 
interest has emerged in the 
Telecom Italia flotation over 
the composition of the priva- 
tised company’s board. 

AT&T and Unisource rep- 
resentatives will be allowed 
to sit on the board, even 
before the two groups com- 
plete negotiations to acquire 
a stake in Telecom Italia. 

Guido Rossi. Telecom 
Italia chairman, yesterday 
acknowledged the potential 
conflict at the start of Tele- 
com Italia’s privatisation 
roadshows to launch 
Europe's largest secondary 
equity offering. 

Telecom Italia and the Ital- 
ian Treasury consider the 
strategic alliance with 
AT&T, the world's largest 
telecommunications group, 
and with Unisource, the 
European telecoms consor- 
tium and partner of AT&T, 
as crucial to the develop- 
ment of the privatised 

Although AT&T and Uni- 
source this summer reached 

a tentative agreement with 
Telecom Italia to forge a 
global alliance, they have 
yet to finalise the deal. 
Under the plan, the two 
groups will each acquire a 
1.2 per cent stake in Telecom 
I talia, anil the I talian com- 
pany will in turn buy a stake 
in AT&T. 

Telecom Italia hopes to 
complete the negotiations 
this year. But the two even- 
tual partners are being 
offered a seat each on the 
new Telecom Italia board 

Mr Rossi confirmed yester- 
day that AT&T and Uni- 
source would only pay for 
their stakes once negotia- 
tions were completed. But 
because of the complexity 
and m echanis ms of the pri- 
vatisation process, represen- 
tatives of the two Interna- 
tional groups would sit an 
the new board from the out- 

He added Telecom Italia 
would not seek a seat on the 
AT&T board when it eventu- 
ally acquired its reciprocal 
stake in the US company. 

Mr Rossi said the AT&T 

and Unisource representa- 
tives would have to step 
down if the talks collapsed, 
and that this issue had been 
considered “very carefully” 
in view of “the potential for 
conflict of interest”. 

However, he said much 
would also depend on the 
sensitivity and attitudes of 
AT&T, implying the new 
representatives should not 
take part in board meetings 
and discussions concerning 
the AT&T and Unisource 

The sale of the govern- 
ment’s remaining 32.8 per 
cent stake in Telecom Italia 
will raise about L16,500bn 
($&5hn). The offer involves 
l.5bn shares for retail and 
institutional investors. An 
additional 225m shar es have 
been reserved for the 
so-called “greenshoe”, or 
underwriters’ option, to 
acquire additional shares, 
and 150m shares have been 
reserved to fulfil the bonus 
Share entitlement for Italian 
retail investors. 

The Treasury has already 
placed 9.02 per cent of its 
holding with a group of 14 

Telecom Italia 

core shareholders, which 
paid a total of L6 JOObn for 
their combined stakes. 

The offer, which runs from 
20-24 October, has been 
structured in five parts: a 
minimum of 700m shares for 
Italian retail investors, with 
up to 25 per cent reserved for 
Telecom Italia employees; 
160m shares for Italian insti- 
tutional investors; 160m for 
UK institutions: 220m shares 
for public offerings in the US 
and Canada; and 160m 
shares far investors in the 
rest af the world. 

Italian retail investors are 
being granted a 3 per cent 
discount (4 per cent for Tele- 
com Italia employees) to the 
nfffoiai market price on Fri- 
day 24 October. The offer 
price will be announced on 
Saturday 25 October. Retail 
investors will also receive a 
bonus share for every 10 
bought, with a limit of 300 
bonus shares, as long as 
these shares are held for a 

Telecom Italia win be the 
largest quoted Italian com- 
pany in terms of capitalisa- 

Engaged: John Walter, president of AT&T, shakes hands 
with Guido Rossi, right, chairman of Stet/Telecom Italia, 
over the joint provision of services agreed this summer ap 

France hints 
at delay in 
GAN sell-off 

Akzo enters joint venture 
for Industrial fibres unit 

By Andrew Jack 
in Paris 

The French government 
yesterday indicated that it 
would put back the sale of 
GAN. the state-owned insur- 
ance group, to make way for 
the rapid privatisation of 
CIC.the insurer’s banking 

Dominique Strauss-Kahn, 
economics, finance and 
industry minister, said yes- 
terday that the CIC sell-off 
would “probably” take place 
first, with the operation get- 
ting under way in toe com- 
ing weeks. 

The news came in spite of 
a decision announced in July 
by Lionel Jospin, prime min- 
ister. agreeing to the sale of 
the GAN -CIC group, and pre- 
vious signs that the process 
would begin during Septem- 

It came on the day that 
AGF, the privatised French 
insurer, unveiled a plan to 
take control of rival Athdna 
- a move that may diminish 
its Interest in pursuing a bid 
for GAN. 

If it goes ahead, the AGF 
purchase - part of a planned 
takeover by existing share- 
holders of Worms, the con- 
glomerate which owns 
Athena - would considera- 
bly strengthen AGF’s posi- 

AGF had already been bid- 
ding for Athdna, and the 
purchase would help acceler- 
ate the restructuring of the 
French financial sector, fol- 
lowing the merger approved 
this year of Axa and UAP, 
two other insurers. 

AGF had been lobbying to 

buy GAN, in spite of argu- 
ments - including an opin- 
ion prepared by civil ser- 
vants in the European 
Commission in Brussels over 
the summer - that the deal 
would be undesirable. 

Antoine Jeancourt-Galig- 
nani, AGF. chairman, said 
yesterday that the planned 
Athena purchase had been 
motivated by a desire to 
boost returns to sharehold- 
ers and maintain the group's 
financial solidity. He said he 
would consider any potential 
acquisition of GAN using the 
same criteria. 

AGF said that the Athfena 
acquisition would reinforce 
its position as France's sec- 
ond-largest insurer and 
accelerate its objective of 
raising profitability. 

The combined group 
would be the fourth -largest 
car insurer, with 7.6 per cent 
of the market, and second- 
largest housing multi-risk 
insurer, with 10 per cent. It 
would rank second in health 
insurance, with 11.9 per 
cent, and fourth in life assur- 
ance, with 6.5 per cent 

It would have 2,180 general 
insurance sales agents gen- 
erating FFrl4.5bn ($2.45bn) 
In premiums, and would 
double the size of its broker- 
age operations. 

If AGF’s purchase of 
Athfina goes ahead, it may 
strengthen the hand of for- 
eign buyers interested In 
acquiring GAN to boost their 
presence in France. These 
would include Allianz , of 
Germany, and Italy's Gener- 
ali which had been one of 
the front-runners to acquire 

By Gordon Cramb 
in Amsterdam 

Akzo Nobel is to put nearly 
half its fibres operations into 
a joint venture with Sabanci, 
a large Turkish conglomer- 
ate, in a deal which relieves 
the Dutch chemical group of 
same of its worst performing 

The venture will take over 
Akzo’s industrial fibres unit 
supplying polyester, nylon 
and rayon for use in items 
such as car seatbelts and air- 
bags. The unit is the world’s 
largest in its sector 

Its sales of FI 1.6bn <$806m) 
compare with F13.39bn for 
all the company's fibres 

By Tom Burn hi Madrid 

Aceralia, the state-controlled 
Spanish steel company in 
which Arbed of Luxembourg 
took a 35 per cent stake in 
July, will be frilly privatised 
at the end of next month 
through an equity offering 
likely to raise Pta200bn 
(Sl-3bn) an Madrid's Bolsa. 

The speedy disposal of 
what was formerly known as 
CSI Corporation Slderfrrgica 
has been made possible by 
the strength of the domestic 
equity market where small 
savers are flocking to buy 
shares in Endesa, the power 

“The demand for Endesa 
indicates that it will not be 
difficult to place Aceralia,” 
an official said yesterday. 

activities in 1996, and 
FI 22.4bn for the group as a 
whole. Its 4.500 employees 
account for more than 6 per 
cent of the total workforce. 

Fibres brought in operat- 
ing earnings of FI 82m last 
year and FI 38m in the first 
half of 1997. These figures 
include contributions from 
viscose yarn, carpet mate- 
rial, cable coverings and 
membranes, which are to 
stay within the group. 

In late July, Akzo 
described the fibres’ results 
as unsatisfactory and sig- 
nalled the shake-up by say- 
ing that "restructuring mea- 
sures are being implemented 
at a higher pace”. 

The Endesa offer, worth 
about Ptal,i25bn and repre- 
senting up to 35 per cent of 
its equity, closes on October 
17 and the market disposal 
of Aceralia has been sched- 
uled for between mid- 
November and the first week 
of December. 

The privatisation of the 
last big government-owned 
steel company in western 
Europe began with the 
agreement with Arbed. It 
took a second step at the 
weekend when 5 per cent of 
Aceralia was sold by Sepi, 
the government holding 
which controls the producer, 
to Gonvand, the biggest 
domestic steel distributor, 
for Ptal8.4bn. 

Gonvarri. a big supplier to 
Spain's car Industry, has 

Jean den Hoed, finance 
director, observed at the 
time that the 2 per cent 
return on sales was “not 
even sufficient to compen- 
sate for the financing 

In June, the Arnhem-based 
group sold its 40 per cent 
stake in Fibres Qufrnicas. a 
Mexican producer of polyes- 
ter textiles, to the Alfa group 
which had been its local 

The latest deal, for 
which no price was dis- 
closed, will give Sabanci an 
involvement in manufactur- 
ing sites in Germany, the US 
and Brazil as well as the 

undertaken to support a five- 
year industrial plan for 
Aceralia. It will negotiate 
the details with Arbed prior 
to approval from the govern- 
ment of its equity purchase. 

Arbed acquired its 35 per 
cent stake in Aceralia with 
an all-share transaction 
worth Ptal29J2bzt The dea l 
involved the purchase of 
new shares issued by Acsr- 
alia and the Spanish compa- 
ny’s acquisition of stakes in 
Arbed and three of its sub- 

The government had 
planned to sell up to 15 per 
cent of Aceralia to domestic 
Industrial groups, but nar- 
rowed this phase of the pri- 
vatisation process down to 
the single equity sale to Gon- 

Spanish steel sell-off set 
for November completion 

Daewoo starts Polish car production 

By Haig Slmornan 
in Warsaw 

Daewoo, the fast-expanding 
Korean industrial group, will 
today give a strong vote of 
confidence in Poland’s motor 
industry whan it begins pro- 
duction of its first new gen- 
eration vehicle at the FSO 
car plant. 

Kim Woo-Chung, Daewoo's 
group chairman, said yester- 
day be expected production 
to reach 570.000 units by 
2000, making Poland Dae- 
woo’s biggest foreign produc- 
tion base. 

Daewoo, which has been 
investing heavily in the for- 
mer Eastern bloc, expects 
Poland's car market to 
expand rapidly. Poland is 
likely to be the seventh big- 

gest car market in Europe 
this year, from tenth in 1993. 

“We expect it to be the 
sixth largest in 1998 and per- 
haps even the fifth biggest in 
the next mingnirimri, ' 1 said 
Kim Tae-Gou, chairman of 
Daewoo Motor. 

The comments came as 
Daewoo launched production 
of the Lanos model at FSO, 
to be followed by the Nubira 
and Leganza models. The 
new models should help to 
raise Daewoo's Polish output 
to 170,000 passenger cars this 
year, compared with 95,000 
in 1996. 

The company, which 
claims to be the biggest for- 
eign investor in the country, 
has already closed the gap 
on Fiat, the market leader in 

Daewoo’s investment in 
FSO is central to its plans to 
build 1.5m of its projected 
output of 2Jjm vehicles out- 
side Korea by 2000. 

The Korean company, 
which already builds cars in 
Romania and Uzbekistan, 
recently signed a joint ven- 
ture in Ukraine, and now 
has 14 vehicle plants in 13 

Daewoo expects to launch 
in the US next March with 
the family-sized Leganza. Its 
range will subsequently be 
extended to include its two 
other models. 

Mr Kim, of Daewoo Motor, 
said the company had 
decided to attack the US 
market via direct sales to 
customers through factory- 
owned outlets. It would also 

use independent dealerships 
in the handful of states 
where direct sales were 

He said Daewoo was con- 
cerned by the recent US 
threats to impose retaliatory 
tariffs an some Korean prod- 
ucts because of allegedly 
unfair trading practices by 
the Korean motor industry 
in its home market. 

“I hope both countries will 
try to conclude this matter 
in a mutually favourable and 
beneficial manner. Today, 
such action is not very 
favourable to Korean indus- 
try." he said. 

Among other markets 
being studied by Daewoo are 
China and parts of South 
America. The company is 
already active in compo- 

nents production and hopes 
to reach agreement with the 
Chinese authorities to start 
building cars by the end of 
next year. 

Mr Kim said there had 
been "no discussions’* about 
buying into Kte. the troubled ' 
Korean vehicles group. “We 
are very busy. Even without 
them, we’re okay. We’re not 
very anxious to get ft" 

Mr Kim said he thought ■ 
the Korean car market, 
which has suffered from 
over-capacity and sluggish 
demand because of economic 
difficulties, might be past 
the worst. “Demand should 
hit bottom this, year, so we 
hope it will be better in 1998; 
not brilliant, but better.” 

Kia’s cash barriers. 
Page 21 


in Swiss 
hotels deal 

By WtBlam Hall 
In Zurich 

MOvenpick, the Swiss hotel 
and restaurant chain, is 
planning to split off its 
international hotel and 
resorts operation into a 
joint venture in which 
Prince Alwaleed bin Talal, 
the wealthy Saudi investor,-, 
will own a 80 per cent stake. 

The Swiss group, which 
has been struggling . to 
improve its return on 
equity, has signed a memo- 
randum of understanding 
with Kingdom Holding Com- 
pany, an investment com- 
pany controlled by Prince 
Alwaleed* nephew of Saudi 
Arabia’s King Fahd. - 

Kingdom Holding . will 
acquire a significant minor- 
ity participation - expected 
to be 30 per rent - in a new 
hotel holding company of 
MOvenpick Hotels & 
Resorts, which will run 
hotels through management 
and lease contracts. 

Mfivenpick’s shares 
jumped 7 per cant to SFr535 
yesterday following the 
announcement, . which 
included new* of rationalis- 
ation of its international 
restaurants and Marche 
divisions Into one division. 
Gfinfher Wbss, an Austrian 
catering- expert, is being - 
brought in to run the new 

MOvenpick is one of the.; 
smaller International hotel 
chains, with about 40 hotels 
and 7,000 rooms in 10 conn-, 
tries. Christian Windfuhr, : 
head of Mdvenpick’s hotel 
and resorts operation, which -- 
accounts, tor about one-third 
of group turnover, said the . 

aim of the new partnership 

was to' expand the group’s 
presence In the Middle East • 
and Africa. . : i: ;. 

. MOvenpick, . which ranks 
around 80th in terms of 
world hotel operators, has . 
suffered from a lack of crit- 
ical mass, and Mr Windfuhr 
said the link with . the Saadi ." 
prince would “jump-start 
the business”. 

Mr- Windfuhr, who is • 
expected to head the new 
joint . venture, . said 'that ' 
ins t e ad of wWiwg three hew- 
hotels a year, his group 
would aim to add ix * f» n eii ‘ • 
six and ri ght • . 

Prince Alwaleed’s.- pro-, 
posed investment -is the tet- : 
est in a series of hotel ' deals. - 
Over the past year hebas" 
either bought or acquired - . 
stakes in Boston’s Copley 
Plaza, the George V in Paris;: 
the Four Seasons in Amman, 
and Planet Hollywood' 

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iniosys surges 63 % 
at six-month stage 

By Mark Nicholson 
In New Delhi 

A singe in export earnings 
helped infosys Technologies, 
one of India’s trisKest soft- 
ware houses, meet high mar- 
ket -expectations and out- 
strip industry growth 

The company reported a 68 
per cent rise in first-half 
post-tax profits to Rs230m 

(8L3m), against Rsl41m last 

Sales were also sharply 
higher, up 74 per cent to 
Rsi-ibn from Rs6i7m for the 
same half last year. 

The strong interim figures 
were underpinned by a dou- 
bling of software exports - 
comprising both services 
and Infosys 1 own licensed 
products - from Rs515m to 

These offset depressed 
domestic, sales of Rs30xn, 
compared with Rs75m. and 
lower “other income" of 
Rsl7m, against Rs26m. 

The company recom- 
mended an unchanged 

“ttsrim dividend of RslJ 5 per 
RsiO face value share. 

Infosys shares yesterday 
rose 455 per cent on Friday's 
close on the Bombay Stock 
Exchange at Rs 1,601, shghtly 
off the morning hi F hq which 
preceded the announcement. 

The National Stock 
Exchange, India’s biggest, 
remained closed yesterday 
due to the failure of 
Insat-2D, the satellite which 
links brokers cm the national 

Analysts with foreign 
institutions in Bombay said 
the results were In line with 
high expectations for 
Infosys, one of India’s top 
five software exporters, and 
strong ly surpassed expected 
growth for the sector. They 
had foreseen average sales 
growth of between 50 per 
cent and 55 pear cent, with 
profits rising on average 45 
per cent. 

N.R Narayanan Murthy, 
chairman and managing 
director of the Bangalore- 
based company, said the 
sharp rise in exports fol- 


Jusco to help 
ailing retailer 

Jusco, the Japanese retailer, has stepped in to help 
Yaohan Japan, the ailing supermarket chain operator, 
with its merchandise procurement and daily operations 
after pleas from Yaoban's labour uninn, an industry 
group and the court-appointed administrator. Yaohan 
Japan, the flagship company in a retailing empire that 
expanded aggressively in the 1980s. last month said it had 
become insolvent with debts of Yl6L3bn (#L82bn). 

Jusco has told the Shizuoka District Court in eastern 
Japan, where Yaohan Japan filed for court protection 
from creditors last month, that it would offer help to the 
troubled retailer. “We have decided for now to co-operate 
in such areas as merchandise procurement, which has 
been a problem in the company’s efforts to stay in busi- 
ness, and daily operations of the stores” ft said. Takuya 
Oka da, Jusco chairman, said his company might hire 

some of Yaoban's employees. 

Yaohan Japan, which operates 42 outlets in Japan, 
became tbe country's seventh publicly listed company to 
go under this year. The government said It would take 
steps to prevent chain-reaction bankruptcies at small and 
medium-sized companies that supplied the retailer. 

Yao&an Japan’s stock, due to he delisted on December 
19. was the most heavily traded issue on the Tokyo Stock 
Exchange's firstsection on Monday, closing at Y9, up on 
Friday’s close ofY3. At the beginning of the year, the 
shares had reached Y540. Jusco shares closed yesterday at 
Y2.750, down Y18Q. Reuters, Tokyo 


Cement producer in BPO 

Anhui Conch Cement, the Chinese cement producer, is 
issuing 36lm H-shares at HK$2.28 each in an Initial public 
offering in Hong Kong. The company said it would have a 
total H-share marie ut capitalisation of HK$823.1m 
(US$1 06.4m). The offer comprises an international placing 
of 30655m shares and an Issue of 5415m in Hong Kong. 
The company has also granted underwriters an option for 
5415m additional shares to cover over-allotments. 

The Issue price represents a prospective price/earnings 
multiple of 12 on a folly-diluted basis and 95 on a 
weighted-average basis. The prospective dividend yield is 
2.6 per cent. 

The IPO will run from October 7-18 and dealing is 
expected to begin on October 21. Reuters, Hong Kong 


Bank of Melbourne names chief 

Bank of Melbourne has appointed Matthew Slatter of 
Westpac Banking as its new chief executive. Mr Slatter is 
due to take up (he position after court approval of the 
merger .with Westpac is granted. This is expected on Octo- 
ber 17. . 

Last week. Bank of Melbourne shareholders voted over- 
whelmingly to approve a A$L44bn (US$L05bn) merger. Mr 
Slatter has been Westpac’s chief financial officer since 
June 1996 and was involved in Westpac’s acquisition of 
Bank of Melbourne and the purchase of Trust Bank of 
New Zealand. Reuters, Melbourne 


Domino’s Pizza sets growth target 

Thomas Monaghan to make Domino’s Pizza, the 
pizza rhain he founded 37 years ago, the world’s third big- 
gest test-food franchise with 10,000 stores by 2003. The 
chairman of the US pizza chain was in Taipei yesterday to 
celebrate the opening of its 100th outlet in Taiwan. The 
aim is to open another 50 on the island by the end of the 
century. Since the first outlet opened in 1989, Taiwan has 
been Domino’s fastest-growing market in the history of 
the company. Last year, Taiwan sales hit NT$900m 
(US$31. 5m). and are expected to exceed NT$155bn this 
| year Laura Tyson, Taipei 

t lowed the start of several 
new projects, mostly in the 
y US which constitutes 80 per 
s cent of Infosys’ export 
k market 

y “We've done well because 
h of these new projects, where 
t- per capita productivity is 
k higher," he said. 

:, However, he pointed out 
f that many of the projects 
f would be brought back to 
i India over the next six 
1 months, and this would 
lower relative productivity 
i and flatten earnings outlook 
J for second-half service- 
i related income. 
r Mr Murthy attributed 
) lower domestic sales to a 
i slowdown in the pace of 
1 automation among Indian 
r banks. One of Infosys' main 
i software packages is a h ank - 
r ing automation system sold 
i in India and other deveiop- 
i ing markets. 

Bombay brokerages said 
. they expected sales of this 
r program to recover in the 

- second half, offsetting lower 
i earnings from service 

- contracts. 

to sell its 
stake in 

Newcrest Mining, the 
Australian gold group, Is to 
sell its 11.81 per cent stake 
in Normandy Mining, the 
country's biggest gold pro- 
ducer, Reuters reports from 

Newcrest said it would be 
offering its 192.74m ordi- 
nary shares in Normandy 
held via its equity /gold 
swap with Australia and 
New Zealand Banking 
Group after a global open- 
priced bookbuilding process. 

At Monday’s closing share 
price for Normandy of 
A5L81, the stake is worth 
A$3484m <USS2541m). 

Newcrest bought the 
shares from Minorco. the 
subsidiary of South Africa’s 
Anglo American group, and 
made an unsuccessful 
attempt to break into the 
multi-tiered merger of min- 
ing companies in Australia 
controlled by Normandy. 

It subsequently swapped 
the shares for 740,000 
ounces of gold with Austra- 
lia and New Zealand Bank- 
ing Group, but retained an 
option to unravel the deal 
within two years. 

“They may see now as an 
opportune time to unload,” 
said one analyst 
Gold prices, which tell to 
a 12-year low after the Aus- 
tralian central bank 
announced in July ft had 
sold 167 tonnes from 
reserves, recovered in the 
past week. 

Robert Champion de Cres- 
pi g n y , Normandy diwirwum, 
said in August that 
Normandy was interested 
in buying back the shares. 

Newcrest said the disposal 
was subject to the receipt of 
bids at prices which would 
result in an acceptable out- 
come in the Go Id /Equity 
swap. No p re-determined 
share allocations have been 

“Newcrest is seeking to 
exit its Normandy position 
at an acceptable price,” 
Gary Scan lan, executive 
general manager finance, 
said in a statement 
Analysts said that New- 
crest would seek a premium 
for its Normandy shares, bnt 
they doubted If the price 
would be close to the 
A$2.60-plns paid by New- 
crest whrai it amassed the 

Bookbuilding, in which 
Australian retail investors 
can participate, will (dose on 
October 8. 

Ord Minnett Corporate 
Finance has been appointed 
global co-ordinator and 
bookrunner to the offer. 

Banks provide emergency 
funds to Sanyo Securities 

By Gillian Tett in Tokyo 

Sanyo Securities, the 
troubled Japanese broker, is 
to receive Y9bn ($74m) worth 
of emergency assistance 
from three Japanese banks, 
it emerged yesterday. 

The three hanks - Bank of 
Tokyo-Mitsublshi, Nippon 
Credit Bank; and Daiwa 
Bank - have been important 
creditors to. Sanyo. However, 
these links have not been as 
strong as those usually 
maintained between a bro- 
ker and any single “main" 
bank lender. 

The assistance comes after 
revelations of mounting 
lo s s*** and large bad debts at 
Sanyo recently prompted a 
sharp fell in the company’s 
share price - and specula- 
tion about its future. 

Sanyo has recorded more 
than YlOObn worth of recur- 
ring losses in the la st six 
fiyiawHai years, and is expec- 
ted - like other Japanese 
brokers - to face more busi- 
ness pressure because of 

looming deregulation. 

The latest offer of assis-' 
tance is unlikely to solve 
Sanyo’s longer term prob- 

Up against the cash barriers 

Kia’s temporary court protection means it must rely on cash flow to keep going 

S outh Korea's Kla motor 
group appears to be 
running on empty after 
rejecting a demand from its 
bank creditors to apply for 
court receivership by yester- 

Although under temporary 
court protection, Korea's 
third- largest carmaker must 
now survive on crab flow to 
keep its operations function- 

Kia’s main banks have cut 
off loans unless the group 
applies for court receiver- 
ship and its management 
resigns, and the government 
has refused to bail out 
Korea's eighth largest con- 

The banks, faced with 
mounting bad loans due to 
an economic slowdown and 
several big corporate col- 
lapses, want to sell many of 
Kia's businesses to help 
recoup some of their debts. 
The government believes Kia 
might be beyond salvation, 
given that the nation's car 
industry is struggling with 
surplus production capacity. 

Analysts believe Kia's 
cash reserves are not suffi- 
cient to keep the group from 
sinking under an estimated 
Wonll.500bn <$l2.58bn) debts 
in what would be Korea’s 
biggest bankruptcy. 

Meanwhile, there is a note 
of desperation at Kia as it 
tells dealers to press for the 
collection of payments 
because cash is critical to its 

The group's troubles have 
already taken their toll on 
its 6ales and distribution 

network following the clo- 
sure or many of its show- 
rooms. Total sales last 
month plummeted 14 per 
cent - the second consecu- 
tive monthly decline - and 
its domestic market share 
has shrunk to 20 per cent 

Production has also fallen 
due to a lack of components 
from cash-strapped subcon- 
tractors and last week's 
two-day strike by Kia work- 
ers protesting at the refusal 
by government and banks to 
help the carmaker. 

These problems could 
worsen, since Kia's biggest 
creditors have said they will 
not proride loans to the sub- 
contractors. “Kia is being 
financially starved to death," 
says one analyst 

Kia is looking to asset dis- 
posals - it is selling its steel 
and construction units along 
with Won3.000bn in property 
- to raise sufficient capital 
to enable it to survive while 
it waits for up to six months 
for the courts to rule on its 
application for court media- 
tion. This would allow it to 
reschedule debt payments 
over five years and retain its 

Trading on its image of 
the "people's conglomerate”. 
Kia is also depending on 
public goodwill for its sur- 
vival and is portraying its 
struggle with the hanks and 
government as one of David 
versus Goliath. 

It is ironic that govern- 
ment officials once held Kia 
up as a model for Korea’s 
family-owned and sprawling 
industrial groups. Sharehold- 

Kia Motors: crucial Junction 

are victims of a plot by 
banks and government to 
transfer ownership of Kla 
Motors, the car division, to 
Samsung to boost its nascent 
car venture, which starts 
full operation next year. 
This is particularly disturb- 
ing to Kia’s unionised work- 
force: Samsung is a non-u- 
ni onised group. 

W arnings by Kia 
that its collapse 
would lead to 
heavy Job losses and exacer- 
bate the country’s economic 
woes have won public sym- 
pathy. It hopes to persuade 
some creditors to renew 
lending, and the two l ading 
candidates in the December 
presidential election have 
expressed support for Kia’s 

But analysts suspect that 
Kia might be playing for 
time until after the presiden- 
tial election in the expecta- 
tion that Kim Dae-jung, the 
opposition leader, will be 
elected. Kia has a big plant 
In his political stronghold of 
the south-west Cholla 

Ford. Kia's single largest 
shareholder (albeit a passive 
one), has also suggested it 
opposes court receivership 
for Kia since it would lose 
nearly S60m in Kia shares. 

But Kia's biggest creditors 
appear adamant in pressing 
for action which would 
result in the appointment of 
new executives to adminis- 
ter the group. 

John Burton 

Share price rebiSve to the 
Seoul Composite 


Net protft/Ioss 
(won bn) 

Jn 1097 

Sources DacastnsanvlCV, Rower 

ing in the carmaker is 
widely diversified, including 
employees and subcontrac- 
tors, rather than concen- 
trated in the hands of the 
family founders. In addition, 
it has largely focused on its 
core vehicle-making busi- 

Now, it is threatened with 

1882 83 04 05 06 

being broken up and sold to 
the nation's biggest con- 
glomerates, thereby increas- 
ing their dominance in the 
Korean economy. 

Daewoo is interested in 
Asia Motors, Kia's truck 
operations, and Hyundai its 
steel business. 

Kla workers maintain they 

: -year results 

Sale of Havas Intermediation 

Exchange of CLMM shares for Audiofina Shares 



I - Half-year results 

The Havas Board of Directors, meeting on October 2, 1997 under the chairmanship of Mr. Pierre Dauzier, adopted consolidated financial sta- 
tements for the first half of 1997. 

(FF mflfionsX. 


Operating income 

Equity affiliates* 

lst-haff 1997 




lst-hatf 1996 



Change % 

+ 5.1 
+ 23,0 

+ 204.1 

Year 1996 




Net income, Group share, before 
amortization of goodwill on acquisitions 





+ 140.2 

+ 32.8 


of which new activities 




of wNch exceptional items 




Net income. Group share, after 
amortization of goodwill on acquisitions 



+ 167.3 






Net cash and marketable securities 


. 1,812 


lems, given the scale of its 
losses and debts, officials 
said yesterday. 

However, the offer of help, 
which is intended to address 
short-term cash flow prob- 
lems, reflects a traditional 
pattern in Japan, where 
stronger hanks are expected 
to help weaker companies. 

Some officials have argued 
deregulation was likely to 
break these obligations. 
However, In practice - as 
the latest offer of help shows 
— many companies still cmd 
it hard to avoid giving a 
symbolic token of support 

*Share in net Income, including exceptional Items, of Canal*. CLMM/Audiofina/CU and Havas Advertising. 

Consolidated revenues for the six months to June 30, 1997 amounted to FF25 MHon, showing a rise of 5.1 % from the same period of 1996. 
At constant structure and exchange rates, the rise was 7.2 %. 

Operating income of fully consofidated companies amounted to FFS36 mHHon, representing a rise of 21 % from the same period of 1996. 

This reflects growth in the information division (press and trade fairs, the latter benefiting from favorable scheduling), local media (free sheets and 
outdoor advertising) and advertising representation for German television. Improved results in publishing were also a factor, albeit to a lesser 
extent However, operating income suffered as a result of first consolidation of Havas Images (Monegasque des Ondes) and elimination of 
M&trobus from the scope of consolidation. Excluding the impact of these two changes, operating income rose by 35 %. 

Inte rests In the net income of companies accounted for by the equity method (34 % of Canah-, 40 % of CLMM, 38 % of Havas Advertising) rose 
204,1 % to FF660 mlBon. 

Net Income, Group share, before amo r ti za tion of goodwill on acqui s i tio ns rose 140.2 % to FF1^242 million. 

This includes net exceptional income in the amount of FF880 million, the bulk of which resulted from the sale of C.LT. shares by Audiofina in 
connection with CLT-UFA merger, and from the sale of interests in Capital Radio, M&robus and MediaVision. 

Excluding net exceptional items and before new investments in audiovisual and multimedia business (i.e.. new projects with CanaH- and CU-UFA, first 
consolidation of Havas Images and expansion of Havas Interactive) net income rase 33 % to FF663 million. This increase in income from traditional 
businesses demonstrates the capacity of Havas to improus earnings. 

Net income. Group share, alter amortization of goodwffl on acquisitions amounted to FF1104 million or 1673% more than in the first half of 

The Group’s net financial debt at June 30, 1997 amounted to FF1.051 million compared with a net cash surplus of FF1.345 million at December 
31, 1996. This change reflects the acquisition of C.E.P. Communication shares fan the amount of FF2.748 million, within the framework of a public 
tender offer. 

Consofidated shareholders' equity amounted to FF14A bSBon at June 30, 1997, compared with FF12.9 billion at December 31, 1996. This chan- 
ge reflects the capital increase reserved to Compagnie GGnferale des Eaux and Audiopar in connection with the contribution of these companies 
of audiovisual assets to Havas In March 1997. 

investments mnounted to FF10.3 bBkn, compared with FFL2 billion in the first half of 1996. In addition to the acquisition of minority Interests 
In C.E.P. Communication for FF2.7 billion, they include FF6.7 billion, for asset contributions from Compagnie G6n6rale des Eaux and Audiopar. 
Working capital from operations amounted- to FF1.036 million in the first half of 1997, compared with FF762 million in the same period of the 
previous year. 

1997 outlook 

Expected market growth, in particular for press, publishing and local media operations, should fuel a rise in net income from traditional activities. 
Despite continued heavy investment in the audiovisual sector, net income. Group share, should tints in any case be at least equal to estimates 
already pubfished. 

II - Sale of Havas Intermediation 

The Havas Board of Directors approved plans for the sale of 100 % of Havas Intermediation, specializing in international advertising representation, 
to CIT-UFA. 

Peaktime (software development for advertising markets), RCI ad IMM (advertising representation for In-flight magazines) and QSP (advertising 
representation for official gazettes) are excluding from the scope of the sale, as are Interests of 50 % in Adways and 40 % in Senger. 

The sale is based on a valuation of FF860 million after payment to Havas of a dividend in the amount of FF500 million. The transaction should be 
concluded in the opening months of 1998, and generate a capital gain in the vicinity of FF400 million. 

III - Exchange of CLMM shares for Audtoflna shares 

The Havas Board of Directors approved a projected agreement with Bectrafina, a member of the GBL group, under which Havas will transfer its 
40 % interest in holding company CLMM to Bectrafina in exchange for Audiofina shares listed on the Luxembourg, Brussels and Paris stock 
excharges, following the exchange, Havas will hold 19.6 % of Audiofina equity after dHution. 

The principal terms of shareholders’ agreements between Havas, GBL and Bertelsmann are to remain fully in force until the end of 2005. 

Havas will thus continue to enjoy a priority right, in the form of purchase options or preemptive rights, to take over joint control of CU-UFA In the 
event that Electrafina loses this joint control. 

if Havas does not excercise this right it will continue to enjoy the tag-along rights to demand the purchase of its interest to the person or persons 
taking joint control. 

This transaction gives Havas greater freedom of maneuver and clarifies its relationship with GBL 

IV - C.E.P. Communication merger Into Havas 

The Board of Directoi s was also apprized of plans to merge C.E.P. Communication into Havas. An announcement will be made on this subject short- 
ly, and employee representatives will be consulted. The merger is intended to simplify group operating structures and facilitate the development 
of new activities. 

V - Express - Le Point group 

The Board of Directors was also apprized of progress in negociations for the sale of the Express - Le Point group. Eric Licoys, Senior Executive Vice 
President, was asked to continue these negotiations. 

Internet wtp. - //**vw havas. fr 

For further information, please contact: 

Anne Brucy - Director of puMc relations (+33/1) 

jea/Haunnt Nafwr - Director of investor rotations- and financial operations (+33/1) 53,53.36.39. 





By Pater Marsh 

BOC. the industrial gases 
group, is combining its divi- 
sions selling gases and vac- 
uum pumps to the semi 
conductor industry to lift 
revenues from one of the 
world’s fastest growing 
industrial sectors. 

The operation hopes to 
achieve annual sale* of £ibn 
($l_62hn) in five years, dou- 
ble the current figure, ft will 
be based on Edwards High 

Vacuum, the world’s biggest 
supplier of vacuum pumps 
which gains 70 per cent of its 
£84001 a year turnover from 
the semiconductor industry. 

The second leg win be the 
part of BOCs general gases 
businesses which sell to the 
world microchip Industry. 

BOO'S venture is specifi- 
cally geared to setting to OS 
and east Aslan customers. 
Tfcese two regions are the 
fastest growing areas for 
semiconductor production 

and will account tor a com- 
bined 70 per cent of the oper- 
ation’s sales. 

Microchip companies are 
large users of high-purity 
gases used In processing 
operations, and also of 
extremely accurate pumps 
required to handle these 
gases in wafer fabrication 
plants often costing more 
than $ibn. 

Sales to microchip makers 
of gaaes such as nitrogen, 
sila n e and argon add up to 

only a fairly small part of 
BOCs £3bn a year gas sales. 
However, volumes are grow- 
ing quickly, in line with the 
rate of expansion In global 
semiconductor output 

Microchip companies 
spend about $35bn annually 
on manufacturing equip- 
ment and are forecast to lift 
annual sales from $130bn 
this year to at least double 
that, by early next century. 

BOC believes the division 
will be able to offer a better 

service to chip companies, 
such as Texas Instruments 
of the US, which buy large 
amounts of pumps and gases 
from the UK company. 

BOC also thinks that by 
nwWng the two parts of its 
semiconductor activities, it 
should be able to step up 
sate to other integrated cir- 
cuit makers which currently 
use BOC gases or pumps, 
but not both. 

Raj Rajagopal. managing 
director of the new semi 

conductor and vacuum divi- 
sion. who also heads 
Edwards High Vacuum, said 
the operation should build 
on the success of BOO’S vac- 
uum operations which hara 
tripled sales since 

the start of the 1990s. 

Edwards High Vacuum 
rtwims to be the lead sup- 
plier in vacuum pumps to 
seven of the world’s top 10 
chjpmakers ranked by their 
annual spending in manufac- 
turing' equipment. 

Drinks group contemplates single life 

Consolidation has focused attention on Allied fSP** 
Domecq’s unattached state, says John Willman 

I t is a familiar story: the 
single thirty something 
thrown into a premature 
mid-life crisis by the realisa- 
tion that contemporaries are 
fast pairing off. 

In the case of Allied 
Domecq, the drinks group, 
there is only one marriage 
among peers to fret over. 
But the proposed merger of 
Guinness and Gfrand Metro- 
politan to form GMG Brands 
has led many observers to 
revive gossip about suitable 
partners for Allied - or even 
to say it cannot survive in 
its present form. 

Allied denies it Is under 
pressure to find a partner or 
to crm te mpiatw a demerger. 
But it expects the GMG 
merger to go ahead even if 
some brands have to be shed 
to satisfy regulators. 

And it bas set tip a task- 
force led by Rupert Barclay, 
the director of strategy 
taken an in May, to examine 
the options. “Life will never 
the same again,” says an 
adviser to the company. 

For many investors in the 
group, this realisation is 
long overdue. Allied’s shares 
have underperformed the 
market for years - la g gin g 
60 per cent behind the FTSE 
All-Share index over the past 
five years. 

Much of the alcoholic bev- 
erages sector has been 
depressed over that period. 
But even so Allied has 
trailed Its sector by 30 per 
cent in that timn. 

Performance baa picked up 
recently, with most analysts 

modestly optimistic about 
the full-year figures to 
August 31, due next month. 

But the formation of GMG 
would mean steady growth 
was no longer an option. The 
merged drinks company 
would have twice the global 
sales of Allied, a much stron- 
ger portfolio of brands and 
for superior distribution 

Allied, meanwhile, has 12 
brands Belling more than lzn 
cases a year compared with 
(BIG’s 19, no leading nam e 
in vodka and a long tail of 
small brands that contribute 
more than half the spirits 
division’s gross profit but 
contribute little to any seri- 
ous growth strategy. Its dis- 
tribution is also weak in 
large areas of the world. 

As a tYtmpnny with inter- 
national ambitions. Allied 
ntxxfo an international part- 
ner - preferably with com- 
plementary products and dis- 
tribution networks. There 
are several mmdidataa that 
appear to need a merger as 
mnrh as Allied to stay in the 
race with (BIG: they include 
Seagram of Canada; Pernod 
Ricard, the French drinks 
group; Brown Foreman, 
which makes Jack Daniel's, 
and Bacardi, the US rum- 

maker which owns Martini 

Most of these are, how- 
ever, controlled or domi- 
nated by famili es which are 
under less pressure from 
investors to surrender their 
independence. Seagram, 
which would o ffer the best 
fit for Allied, has devoted 

much of its energies recently 
to the media interests 
beloved of Edgar Bronfman 
Jnr, chief executive. 

“It might be unwilling to 
put more capital into the 
drinks division,*’ says one 
analyst “At present it needs 
whatever cash spirits gener- 
ates to finance entertain- 

Even if thfc could be over- 
come, it could be hard for 
Allied to reach an agreement 
with Seagram without 
ceding control to the Cana- 
dian group's managers, who 
are generally seen as having 
done a better job than 

T here are options short 
of a merger, though. 
Seagram could form 
joint ventures with one of 
these groups - along the 
UrtAs of the alliance between 
Guinness and Mofit Hen- 
nessy, the drinks arm of 
LVMH. the French luxury 
goods group. 

“If it was flexible and on 
the right terms, it could 
deliver value for the share- 
holders says Tony Hales, 
Allied’s chief executive. But 
he adds that “it takes two to 
tango” — implying that the 
likely partners are still cir- 
cling the dance floor, reluc- 
tant to take the plunge. 

The absence of any clear 
option for merger or partner- 
ship has led to a revival of 
demerger talk, separating 
the drinks business from the 
retailing side of Allied 
with its UK pub chains and 

It is a golden age for res- 
taurants, says Groups 
Chez Gerard, particularly 
in T-rmHrm- But for which? 

The outlook in the capital 
does cot appear quite so 
tasty given the fierce com- 
petition for sites which 
has forced a step cha nge in 
rental costs. Moreover, - 
T/t^rkm has experienced a 
record number of restau- 
rant closures in 199?^ 

tears, this can only mean . .. ' . 

the market will become ever more competiti ve, ffh e fiweet 
property deals that bolstered the early suc cess -oT Sfr 
Terence Conran, who introduced mega restaurants to 
are clearly no longer available. True, some iare 
able to increase prices, but this seems restric ted to a few 
operators at the upper end -meals of say £S0(|8l)a.heari 
or more. Furthermore, wage costs are rising. 

Yet not everything Groupe Chez Gerard says cqa,be 
tog* as pure chantiDy. There are reasons to beflave 
the restaurant business is cm a firmer footing now titan 
for many years. Dining out has shed its cel ebrato ry 
imag B , to become not much more special than a nig ht at 
the The growing number OF double tacom e fagfe 

lies also many people have neither tune nos: energy 

to cook at home. And Britain stQl spends much less per; 
than the US on dining out 

But these factors imply the real grow th prospe cts are 
for mid-marke t restaurants. The overpriced, gastrodrome 
has seen its day. . : J- , 

Chez Gerard dishes 
up strong growth 

By David Blackwell 

US fast food franchises. 

One obstacle to demerger 
now looks likely to be lifted 
with the abolition of UK 
advance corporation tax: 
Allied must pay ACT on its 
dividends but can only 
reclaim it a gains t tax on its 
UK operations. The largely 
UK-based retail side could be 
hived off without such losses 
once ACT goes. 

Another obstacle is the 

legal agreements under 
which Allied borrowed 
money to pay for spirits 
acquisitions in the past. 
These are secured on the 
income from the retailing 

tide — an arrangement that 

could be unpicked only at 
some cost 

But a demerger se ems to 
offer little upside since the 
group’s share price is at a 
discount of only about 10 per 

cent to the value of the two 

■main t niginpsa es If they trore 

separate companies. 

Thus there are plenty of 
options for Allied Domecq - 

but none mums to offer the 
sunnier fu ture that investors 
would like. Nonetheless, 
given the shares’ under- 
performance the pressure to 
act is unlikely to abate. 

“Doing nothing is not an 
option.” as one analyst says. 

London is on the brink of a 
golden era for restaurants, 
according to Groupe Chez 
Gerard, the London chain 
which yesterday reported a 
20 per cent rise in operating 

“The quality, style and 
glamour of London restau- 
rants has never been better”, 
said Laurence Taaamrm dep- 
uty chairman. “London is 
one of the three gastronomic 
capitals of the world, on a 
par with New York and cer- 
tainly offering better 'value 
and more range than Paris.” 

Mr Isaacson entered the 
restaurant business in 1980 
with Neville Abraham; tdrief 

executive,- converting a 
banana warehouse next to 
. the Royal Opera House Into 
Cafe des Amin dtt Vin. The 
pair how have iSjesfourants 
in London, winch ^aivjsited 
each year by 2na tourists 
who nay a auarterbf their 
total £7bn ($LL3bn)^ending 
money oh food and .d rink. 
The group wants to *«p«nd 
the riiain to at least 20 cot®: 
the next two. years.' . - 
\ Pre-tax profits rose from 
£&86m to £3U3m in the ;S3 
weeks to: June 29, and-the 
company said demand - had 
grown at 6 per cent . for. the 
last five years. . 

The shares - 112Kp an flo- 
tation in 1994 - dosed up Tp 
at288V5ip. ■ 



Marion Wedderbum 01 71 8733234 

Fax 0171873 3064 

Melanie Miles 01718738840 


Zambia 'National Commercial Bank is inviting applications 
(bids) from reputable commercial banks to participate in a “TVvin 
Commercial Banking" relationship under the World Bank 
Technical Assistance to the Republic of Zambia for Enterprise 
Development Project (EDP). The provisions under the EDP 
project seek to facilitate ZNCB’s on-going restructuring 
programme and within this framework the successful Twin 
Commercial Banking bidder wffl be expected to: 

a) Assist the Bank in establishing appropriate Management 
Information Systems (MIS) 

b) Assist in the establishment of the Organisation and 
Methods unit in the Bank to prepare, review and enhance 
all banking procedure manuals. 

c) Assist the Bank in the timely implementation of 
appropriate policies and procedures lor alt banking 
activities with emphasis on: 

■ Risk Management 

■ Review of Credit Policy 

■ Loan of Portfolio Management 

■ Funds Management 

d) Assist the Bank establish a Market Economic Research 
and Development Unit 

e) Assist the Baltic enhance its staff training functions. 

f) Generally assist the Bank in the prudent management of 
the institution so as to retain its premier position on the 
market and internationally. 

To qualify for the twinning relationship, the commercial bank 
must safety tire following pre-requisites: 

■ Should be a medium sized Commercial Bank 

■ Must primarily be engaged in ratal banking business 

■ Should have Developing Country experience 

■ Must be English speaking 

The successful bidder wil! be expected to enter into a twfnning 

arrangement with the Bank for a period of at least 24 months 
in order to achieve the set objectives. They should be in a 
position to supply one long term Consultant for a minimum 
duration of one year and several experts for shorter periods 
as weH as provide for one to three months on the job training 
and familiarisation visits for the Bank's officers. 

Interested firms should submit their expression of interests by 
15th October, 1997 to: 

The Managing Director 
Zambia National Commercial Bank 
POBox33G11, Lusaka, Zambia 
Tel: 228979 / 221355 Fax: 224006 


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Notice is hereby given that the BNCE with offices sc 
170 Upper Richmond Road, London SW15 2SH, is 
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info: Ttel: 0181 788 8111 Ext 133 • ' 

Fax: 0181 788 7718 , * • . 


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?lfe are experienced worldwide 
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interested in the potential 
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TO: 0411 077570 
Fkx: 0181 544 0475 

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| E-Mail: 1 00060 J37@Cotnpusenrexom 




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34 David Plow, St He*w, 

Jwaay JE24TE 

Tab 01634 878774 FteC 01534 35401 



We have - direct from 0m manufacturer- naw Mgh quality executive and 
system ranges - conference and recaptions. Large choice or vsnaare, 
meiartilne andfor laminate fMshe* 

with discount of up to 40°= from R.B.P.! 

London Showroom tor vtewing-. 69-73 TTwotiakfc Road, London WQ1X 8TA 
fift eamead and pianr«is senicee. 

LINE ABURO LTD Teh OI71-631 (i076 

On View: Saturday 8 November 1997, 083)0 

Monday 10 & Tuesdays November ' ' • '■ 

‘ 500. . 

She Telephone Number + 49 . 2131 - 3 


T«t +44 19) vn 465 &4U 
+44 (0) 171 405 9772 





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San Francisco-based shareholder calls for sale of petfoods unit 

rejects US attack 

By Alison Maitland in 
kMdon and Wiffiam Lewis New. York 

Dalgety, ' the- troubled UK 
petfoo ds and agribusiness 
grou^fras rejected an attack 
on its restructuring plans 
from a California-based 
. shareholder organisation. 

■ Plantagenet Capital Man- 
agement, a fiduciary bolder 
of "several hundred thou- 
sand shares" worth less than 
$SOm in Dalgety, said in a 
letter to Sir Denys Hender- 
son, chairman; that it found 
Dalgety’s recent actions 
"hard to understand”. 

San Francisco-based Plan- 
tagenet said the planned sale 
.of the ingredients and DS 
food . distribution businesses. 

forecast by analysts to raise 
2350m ({563m), made aftnc^ 
But reinvesting the balance 
m petfoods after returning 
more than £20Gtm to share- 
holders did not 

Calling for the petfood 
business to be sold, Planta- 
genet said Dalgety would 
never have the capital to 
compete effectively with 
Mars, the European market 
leader in petfoods. It also 
urged Dalgety to spin-off or 
sell its pig breeding and agri- 
cultural supply businesses. 

Plantagenet, which 
describes Itself as a "buy 
out/distressed fond" which 
focuses on "troubled situa- 
tions”, said yesterday it had 
held discussions with other 
shareholders based in the US 

and offshore. Informal agree- 
ments had been reached 
about possible future collec- 
tive action against Dalgety. 
said John Zappettini, manag- 
ing director. 

Dalgety said it had not 
been aware of the stake held 
by Plantagenet, which is 
very small in terms of its 
290m ordinary shares. 

“The major shareholders, 
with whom we have dis- 
cussed our plans, support 
our strategy, H said Ken 
Hanna , chief executive. 

Mr Hanna, wbo took over 
last month after the resigna- 
tion of Richard Clothier, ham 
told Plantagenet there is no 
intention to pump new funds 
into petfoods until the busi- 
ness has proved itself. 

He also disputed Plantage- 
net's claim that Dalgety 
could not compete with 
Mars, which has a market 
share of more than 40 per 
cent to its own 25 per cent 

Mr Hanna fr as told Planta- 
genet that the company has 
“looked at every possible 
avenue for creating more 
shareholder value in Dalgety 
and decided this is the best 
way to do it." 

Dalgety bought the Euro- 
pean petfood business of 
Quaker Oats for £440m in 
1995 and merged it with its 
Spillers subsidiary. It is 
believed to be unwilling to 
make a fire sale of petfoods, 
wben profits of £26.4m in 
1996-97 were just 3.7 per cent 
of sales. 

Hambros in French Global distribution 
golf market move deal for Diploma 


European presentation 

The Institnto de Empresa, and the Institute of Industrial Development of the State 
of Minas Gerais (Brazil), under the sponsorship of the European Commission are 
organising the European Presentation on privatisations and concessions of the State of 

Minas Gerais. 

The presentation will take place at the President World Trade Center Hotel of Brussels, on the 13th and 14th of 
November 1997. This presentation will introduce to European entrepreneurs and investors the specific process 
of privatisations and partnership that the State of Minas Gerais is to implement in the 

areas of 

Banking, Energy, Highways and Telecommunications. 

The program includes detailed presentations of the plans concerning these four sectors, as well as an agenda 
of contacts with the authorities in charge of those plans. 

The State of Minas Gerais is the second biggest state in terms of population <16 million) 
of Brazil. It borders the states of Sao Paulo and Rio de Janeiro. It is the Brazilian fastest- 

growing economy. 

Exports Evolution - Minas Gerais I Brazil 

Annual Investment Intention Survey 

By Patrick Harvocson ' 

HEV. the venture capital 
arm 'of the Hambros bank- 
ing group, has moved into 
the sports and leisure busi- 
ness with the FFrlsOm 
((22m) acquisition of Bine 
Green,' the largest . golf 
c ourse Owner in Europe. 

HEV is paying a fraction 
of the FFr2bn reportedly 
spent by Bine Green’s previ- 
ous owner, the French state- 
owned bank Credit Lyon- 

. HEV has bought Bine 
Green,' which operates 
mostly In France but also in 
Belgium, from CDRI, the 
French agency responsible 
for disposing of the assets of 


Cfedit Lyonnais following 
its recapitalisation by the 

Although Bine Green - 
which is forecast to have 
sales of FFr2l0m this year - 
came to dominate the 
French golf landscape by the 
end of the 1980s, overcapa- 
city in the commercial golf 
course market insufficient 
demand and poor manage- 
ment in the 1990s meant the 
business was lossmaldng. 

HEV — which ha« gffiftn 
of funds under numagfrnwii 
- has installed a new man- 
agement team led by Alain 
B$a, fanner chief executive 
of Cobra Golf Europe, and 
some of the company's 
courses are likely to be sold. 

By Chans Gresser 

Diploma, the electronic 
components and steel prod- 
ucts distributor, unveiled an 
alliance yesterday with two 
rivals, Marshall In d ustri es of 
the US, and Sonepar Elec- 
tronique International of 

The partnership will rank 
in the top four of worldwide 
electronic component dis- 

But Diploma’s shares 
dropped 24p. some 8 per 
cent, to close at 268'/ip. Ana- 
lysts attributed the fall to 
disappointment that 
Diploma was not being bid 
for. On Friday, its shares ran 
up 47%p to 292Vlp on 

rumours of an imminent 
takeover approach. The 
shares have been under a 
cloud since a profits warning 
in July pushed them to a 
five-year low. 

The three companies will 
combine their purchasing 
power and integrate IT and 
logistics activities. 

To avoid overlap, SEI’s 
small business in the UK 
will be injected into a joint 
venture company, which will 
be 94 per cent owned by 
Diploma, and 6 per cent by 
SEL Marshall will be respon- 
sible for the US market, 
while SEl will operate in 
continental Europe, and 
Diploma in the UK and the 
Irish Republic. 

im*aemwar.zz~m* f *:r~ 

■■■ini (■!>■ 

E^^ a innni|| 

life AIM 


Source: Septan-MG (Minas Gerais Ptanmng Secretarial) 


The Banco do Estado de 
Minas Gerais (3EMGE), 
has a network of 461 brandies 
in Minas Gerais and 39 in 
other states. As a financial 
group, it is formed by a 
commercial bank, insurance 
company, credit cards 
company, consumer loans 
company, broker / dealer and 
a subsidiary in Uruguay. 

The privatisation process will 
take place over the year 1998. 


CEMJG is one of die largest 
and most important Brazilian 
company in the energy and 
utilities sector, due to its 
strategic situation and marlmr 
size. In the context of the 
privatisation process, the 
sector is being segmented into 
four market activities: power 
generation, transmission, 
distribution and energy 
commercialisation, providing 
opportunities for new ventures 
in these business areas. 


Source: Corporate Location. SeptemberfOcK>vei/1996 


The Minas Gerais' road 
communications network has 
a high strategic value, due to 
its central location in the 
Brazilian road infrastructure. 
The State of Minas Germs is 
now opening up an ambitious 
plan for die construction and 
private exploitation of 2^76 
Kilometres of highways. The 
p)an jtiHnrips d ie cfwwlmrrinn 

of main radial arteries from 
the State's cap"**!. Belo 

Andrews Spins 6 June 29 27.4 

Dosfln L 6 irths-tp June 30 42J) 
Ereape Qwz Garanin 53 wtato Jtne29 195 
Mmsk ■ - ' 6 rafts to June 30* 7910 

Unghas (TJ) _____ 6 (trtts to July 26 32.2 

ES$ ... 9 mthB to Jma 30-fr 3.85 

Jonas Grnwi 9 — — 6 raffs to Jure 30 50 3 

lh *^ ' Vr hv.fcro an 24.1 

Han Bros -. ■- — ■ 6 ruffs to Jtiy 26 612 
PifeMs&t 6 mffls to Jure 30 6.48 

Rap . 6 niffs to June 30 143 

S MBs a s -m ' : 8 raffs toJlne 30 496 

14J - (17J ) 
496 (333) 



payoto (P) 

Mb of 

- Dividends - 

Total lor 


Tote ba 


(341 ) 




NOV 28 









Nov 21 





(238f ) 




Dec 9 







(4-1 ) 


Oct 31 





(0361 ) 




Dec 31 





(D.624 ) 




Jan 30 

















Nov 21 





(4-34 ) 




Nw 11 




. 0227 



P-12 ) 







01366 ) 


<2-1 ) 


Nov 21 









Oct 31 



TELEM1G is the third largest 
Telephone Company in Brazil. 
In the context of the 
privatisation process, it is 
interested in developing and 
expanding hs strategic 
partnerships, mainly in the areas 
of satellite communication, 
cable TV in large dues of the 
State, value-added services, 
development of integrated 
solutions far corporate 
customers and generation of 
infrastructure to make feasible 
large-scale business 

jT9uifn@jc:'nv0fod3 stum n&' FriurttrTn'Sracfcts are fir cdnB p ondhg period.' AAflar a uap ttal charge. fABm a ccepflo na I credit 10n increased capitd. 

raffriMK restated- OTcfe! written premium *ComparaflwB tor y to Sert gg &M) ntrency. ‘Adjusted tor scrip Issue. OAlgi stock. 

For further information and applications, please contact 
Institnto de Empress, Cftkpo de Direcd6n. 

I N S T 1 T U T O 
kjp X * • EMfKBSA 


Madrid: TeL (341 ) 564 53 54 Fax (341) 564 4064 E-mail Ctricgio Dtrecdtin @>ie. 
Brussels: TeL (322) 732 33 33 Fax (322)73289 90 E-mail dxeuropa ®infot»^ 

■ wwwje.ucnLes/mmas. gerais 




- Marlon Wedderbnm 01718733284 

Hi-tedt Components 
Distributor — - 

Fax 0171873 3064 

Melanie Miles 01718733349 

Our cheat is a well established distributor of 
components and subsystems primarily used in 
sophisticated ro cmmni cations systems- Principal 
features oTthe business indnde: 

• Blue chip suppliers & customer list 

• EBIT £365k 

• Strong order book 

• Experienced and committed team . . 

• IS09000 accreditation 

Parnell Keir Forster Corporate Finance 
New Garden House . 

78 Hkttca Garden 

London ECIN 8JA Fte 0171 782 »90 

niniif ** — toii vo— < 

1 1 '-*' * l "~* 






: f ■ 

1'.,. \ .'V V 

( .. ii. u!- \ I'.i.lm*. !%!.»< L-li'ix- I i.inLv\ ( «■ 
> i <I(! Niro-J. ! '>"<!•»;) I < W '’Ml 
j’.j II,- 1 K.\ "l‘I '>«» l-* 1 ’- 

substantial garden centre 


North Wesi England 
£2.7m ptrnover - 50^*- Gross margin 
1 9% Net margin 

Large, frigb quality, rnodeni bufldings 
Pbr further details contact 
TH: 01055511441 Fax; 9105 5SI440 ' 



Design, supply, install and service - 
power systems and 
Supply tools and ancillary services 

Blue-chip clients 
Turnover £5.l5m 
Profit in excess of £460,000 

Principals should contact reference: 9729 


21 John Adam Street, London WC2N SJG 
Telephone: 0171-930 8965 Fax: 0171-950 8437 
Revalued bar sn 


Computer Comp any/ 

Teueconuumcations Market Reirekht Sale 

- Brttoh Btoxitoaurw; eaiaMalwd II yews. Rinww app»oacl*4| £3An and 
vMy profi&Us 

- Mamitaetumr of spedal puipose coraputm » tt» tetacommunicjaion* 

martlet _ _ . 

- Suppfier to a Mete range of OEM and Systems bss^atan 

- ameMno a barge nombw of eignlflcam Bhi* Chip Companies eenndrtg 

conenunieaiians maricete In toe UK. Europe, toe Far East. America and 
Auetrafe . 

- Active hi neworidng markets torohred In Hflh power server tectratogy 

- inramrt jn GerinI Southern England within mteen mtotoss at motorway 

• networtt. 

. princip al s only apply Bok B5451 . Hnanctal Timas. 

Ono Southwart BfWgo. London SEl 9HL 




Producing 150 tons/daily of 
white lined duplex board. 
Substance 300-550 Grs/Sqm. 

Send Fax to: +39 583 582698 

200-300 Ligtototow sad 

«wk. who tier uc. w* »*s 

did and whe-to ««»«• + Scarc ‘ rf 

AacriaotcveiywaA. . . ...... 

pobltaoico Mug ,<*<* 100 * SciaiI 


For totoer drtefls - 

& Acquisitions 
• - Corporate Finance 
Fax 01242 584263 

IT Technics Training 

SpccaRsts in Window programming 

Microsoft Sofetion Provider 

ISO9001. Ccntnl London. 

Eat 7 yen. XO £600t 
Gross prefil 50%. 

WriW m Box B547S. Ftesnciiil Ttocs, 
One Sou*wa* Bridge, 

Industrial Minerals 

Uag EstabBd^ L Northern gawd, 

Yoffft* Abm iaiiiftllllilf iHiium | ii- 
-jMnwvw S2 millJon 
•" - ' Principals only. 

Wrto to Be* BM82, F&oncBl Times. 
OiwSoffitiwiit Bridge. London SEl 9IU- 

i (OK '<11 

'Neite Jnsructcdio wwa Acuksft 
ewUished engUasriog company b 

• iBOHjfaauier of praesu 
inai fiiiwyr 

• S, own pmdncT no gfi Of Odvwued 
auxins «-q n ipmm «. sudtlaefy 

• nanever of £Mm «tUi adjarted 
jBeTiw of maid £0JSm 

0 30% of Banova 1 exported, isaMy b 
USA rad Europe 

• mong aweier ban 

0 ra gewrin g ud cenice 


• ntccncnlak 

Contort RkhardOMfyal 

OCX ft Rwtaert, -Id Mmal Smcl. 

Laadofl WIY 5UD 
Tot un 355 m* te «4«5«n 

Retail motor vehicle sales and 
servicing company for sale 
due to retirement Established 
turnover of over £6m per 
annum from 3 dealerships 
with opportunity to expand 
the business to folly utilise 
the substantial site. 

For further information please 
write to Mr A Bottom, 
Cooper-Parry, 102 Friar Gate, 
Derby. DEI IFR 

Supplier of 
Telecom Services to 
Commerce and Industry. 

Old Established 
London based. 170 £300k+. 
Profitable with Bhie Chip client 
base. Unique opportunity for 
Equity Investment wiib 
1 00% Control on recrement of 
vendor in 2-3 years. 

Pknipph to 
Jade Senmtks Ltd 
Acre Horae, 

11-15 WOEani Bead 
London NW1 3ER 

«^»» H 

PVCu and Aluminium 
trade/domestic. Window 
man ufacturer/i retailer. 
EstabEshed 18 years. 
Turnover £400.000 p*. 

Write to Box B5481, Financial 
Times, One Southwark BridQe, 
London SEl 9HL 



Central London. Licensed business 
travd agency for sale. 
Preferred porrftaser company with 
suable own navel account. 
£5£7m tfo - price £400 - £60Cfc 

BttAets/noo principals will not 
reed re replies. 

1 Write to Boa BS326, Financial Times, 
One Sfedbwarfc Bridge, 
London SEI 9BL 

Institutionally held £lm+ 

CASH SHELL paper Swap; 
suitable to SUPPORT MBI/ 

Write Comptroller, 

Union Trading Enrope Lsnited. 
42/44 Waterioo Street, 

Sole UK righto tar safe. £S0K lor 
company of atsets. Snd soootora and 
spore*. EstdeeferrrtworK Witten Box 
BSSBO. Fhandto Tanas. One Saflhmrk 
BriOgo, London SEl M. 

Travel Agency 


Londetrfsssex ABTA/IATA 
Gross Turnover £2o>+/Pro tittle 
Write: FMCB Mgt i 
Consultants Ltd * 


Hathaway House. Popes Drite, 
Finchley N3 IQP Ref David 
Cowell 0181 3466446 
(fax 01 81 3493990) 

FRtiaoD Et^nwring Company - 
South East 

Good giuwtli with excellent five- 
year profit record. Budgeted sale* 
for 1998 £2m with aa open ling 
profit of 20*. Retirement rale. 

ffiik to B5MS, FhancW Tlrasi 
OraSortlnrwfc Laadra SSI «L 

Business For Sale 

Maanfaconer of a wide range of 
specialist cycles. Assets & Stock. 

For details please contact; 
Richard CresweD 
Teb 0121 772 2512 or 
01789 731336 



Based in ConwaD but ndocaoble. 
Established with low overheads. 
Dealing in ceramics & with good net, 
[wnfaa f Jiiiitwl hn /cL 
£60000 + SJM 

Tel: 01738 754115 

Manufacturer of 
Silver Plated Giftware 

Wednesbury, West Midlands 

The joint ackninistrative nscetvws offer for sale the 
business and assets of W. G. Alen (Birmingham) Limited, 
a manufacturer and wholesaler of silver plated giftware. 

■ QUEEN ANNE and FALSTAFF brand names. 

■ Established UK and export markets. 

■ US subsiefiary. 

■ Turnover c£9m pa. 

■ Long leasehold premises, dose to M6 junction 9. 

■ 200 employees. 

For further details contact: 

Ann Davies or Mark Orton at 

KPMG, 2 Cornwall Street, Birmingham B3 2DL 

Tel: 0121 2323000. Fax: 0121 232 3261. 

KPMG Corporate Recovery 

KPMG Is autooriaad by the Instouto ol Chanared Accourtarts In England 
and VMtoas id carry on Investment Business. 

For Sale 



qbUWbi ad tauliui rrtnto 
ittfctea «k.«tori toncMa plsriirals 

PnUnpaaOl of m kMCVAVfcjarbliil 
tow ytMM. Anton oatridnW. irnl, ■ obTAbcc 





Stovsnss. Vausb ft Aeons 

Itato toner 




Sl AntiSfiae Mmdrean; Ml TS 

to Vksstoam laidDaSWIH ONW 

Teb 0161 833 3311 

Teb 0171 2270778 

Fas 0161 8352949 

Fax: 0171 2270701 

f Md safatofthMaMet 

E Mti mryirnSri rniirmmd 

Busiri: s e s 

For S .a lc pl c 

Floor & WaixThje Merchants 

British Isles - EstZOyn. tfo£5+-ai {60% retail - 40% wholesale) 
40% OP retail & 38% GP wholesale : 4 retail sites (& expanding) 
£670*k net profit (pn directors ft tax) 
major established maricet player : full handover assistance 
retirement sale offers circa £5m outiwcoimn 

0 17 1 2 3 1 12 7 0 

spectoCglng to eanptag hold^ <n 
Franc*, But aemkefted Frareo- 
pMe. Write to: Bn B5477. Fharcial Tmc, 
OneSoftanKBriagtoLantanSEI «L 

(Ai Use) in prime Mayfair location. 
Cisrentiy hading aa a patisserie. 
Devetapmen potential. Fhr quick stoe. 
OSere in toe region of £85,000. Teta: 
0)171) 243 2377 answer phone 




UK gilts fall on Emu survey 


By Simon Davies in London 
and John Labata 
in New York 

European government bond 
markets got off to a weals: 
start yesterday, reacting to 
the sharp downturn in US 
Treasury prices after Euro- 
pean markets had closed on 
Friday. ' 

UK GILTS also suffered 
after a survey published in 
the Financial Times 
suggested that the UK elec- 
torate remains firmly 
opposed to European mone- 
tary union. 

Gilts had rallied strongly 
in the previous six trading 
days on the back of conver- 
gence with German bund 
yields, so there was a strong 
temptation to take profits. 

The December long gilt 
future closed § lower at 

I20g, although only 78,000 
contracts were traded - less 
than half Friday's volume. 
The yield spread over bunds 
widened to 95 basis points, 
from 91 points on Friday. 

Not all the news in the UK 
was bad. Industrial produc- 
tion and manufacturing out- 
put data were weak, and 
analysts suggested this 
should be enough to dis- 
suade the itaTiir of England's 
monetary policy com mi t te e 
from raising rates at this 
week’s meeting. 

Andrew Roberts, debt mar- 
ket strategist at UBS Securi- 
ties, also said the decision, to 
launch the gilt strips martrpt 
on December 8 should sup- 
port longer-dated gilts. 

‘The opening of the strips 
market in Germany had the 
effect of flattening the yield 
curve as everyone bought at 
the long end. And there is no 
new supply of long-dated 

Argentina set 
for D-Marks 


By Samer Iskandar 

Argentina Is expected to 
return to the D-Mark sector, 
possibly today, with the first 
issue since the country's 
sovereign debt rating was 
raised last week by Moody's 
to Ba3. 

Syndicate officials said the 
DMlbn deal, with a 12-year 
maturity and 8 per cent cou- 
pon, was likely to be offered 
with a spread of around 258 
basis points over 10-year 
German bunds. ABN Amro 
would be lead manager. 

Syndicate managers in 
London said the paper was 
likely to appeal to small 
investors, in spite of its 
12-year maturity. 

"The D-Mark sector has 
rallied quite a bit and Inves- 

tors know they will have to 
extend along the curve it 
they want to pick up yield," 
said one. 

Another banker said the 
Issue would have to offer “a 
wider spread than eiri«Hng 
Argentina paper in dollars 
if they want it to be 

L-BANK. the development 
agency of the German region 
of Baden- WOrttemberg, 
tapped the French market 
for FFr2bn with a six-year 

CDC Marches, joint lead 
manager with BNP, said the 
deal satisfied demand in an 
area of the yield curve that 
had seen little supply and in 
which existing paper had 
become expensive. 

A similar issue by L-Bank 
with a seven-year maturity, 
for example, is currently 



Red Bd BM Day chgWk chg Month 

Oct 6 Qate Coupon Price Yield yield yield chg yld 

6-250 102.1068 
10.000 129.1724 

+0.05 -026 

-0U4 —0.44 

7.000 1042900 
5.625 101.0600 

7.000 104-2400 
0250 105.1800 

4-000 100-3700 
7.250 113.1300 

6-000 1023400 
7.000 1064000 

11000 108-3070 
7050 111.1110 

11/99 7000 105.6400 4.13 +003 -001 +008 

10/04 6.750 1090100 5.11 -*003 -006 -0.09 

10/07 5.500 1006100 542 *003 -0.09 -019 

10/25 6000 990600 602 -tOOl -0.14 -029 

3000 992300 
8.750 1090500 
6000 104.1500 
6000 1060000 

8250 101.1100 
8000 1140500 

307 4004 

5.13 -tOOS 
5.44 ->004 

606 +003 

-002 +005 
-008 -0.18 
-0.11 -026 
-0.13 -022 

5.42 +003 

621 +004 

-002 -029 

-009 -028 

6000 1010300 
6250 102.7200 
6.750 105.1600 
7250 1080300 

522 +004 
557 +005 
604 +003 

602 +002 

-001 -002 
-a 04 -axa 

-009 -026 
-008 -039 

4000 1072400 
3000 108.6500 
3000 1124200 

049 -QOI 
124 -003 

102 -003 
208 -002 

+003 -003 
-003 -022 

-an -028 

-000 -022 

7500 1062500 
5.750 1022200 

4.12 +004 

BAS +005 

6500 990462 
6000 1060850 

623 +024 

606 +0.12 

9000 1080000 
8.750 106.0000 

4.18 +0O1 

SOI +002 

8500 1040912 
6025 10S2571 

400 +0O1 

506 +002 

7.400 104-4823 
7250 111.0076 

4.73 +006 

500 +008 

11000 1075550 

4.75 +001 

SOS +003 

4000 103.1800 
4000 108.7000 

1.71 +007 

303 +003 

8000 985313 
6.750 1022125 
7250 1072168 
BOW 1202800 

628 +006 
824 +0.11 

628 +009 

623 +006 

5275 1003125 
7250 107.1250 
6.125 1012125 
6275 101.6580 

528 -004 

523 -006 

525 -006 
825 -006 

&OW 1006500 
SOW 9928W 

450 +002 

65B +002 

London ctabia. New Yd* dosing. Sauce: (nnraotfve Qata/FT Inta ma d un 

Ylrettr Local imiM senferti/Amrebad yttkt beats. Yields shown for Sahr wetoda vrithholdto a 
tax at 125 per cars payable by noneoddantn. 


Spead Spread 

B<d vs vs 

YMd Burafe T-Bonds 

Spread Spread 






•m vs 

Bmds T-Bonda 

NmZi fen* 











-n no 

























+a£ ® Sauce: Ha active Dota/FT rt b m U on 
-4.13 London dooftig ' New Yortt ckldng. 
-053 femdaed yWd beds. 






Oct 8 







date coupn 






W.EUBOPE . ...j. ■ 

■. . 




7.000 BBB- 








7.750 BBS- 







1 1/01 








,m latotMmswa 


.. ’.-'Ll. 

^ T -T-i 

;•.) v ; 




























'.gt-SSUk-. v'.'! 

China 07/06 7.750 BBB+- 

PNBpptoeS 10/16 8-750 BS+ 

Thalpnd 04/07 7.750 A- 

• ,p- <;■ 

Lebanon 07/00 9-125 BS- 

South Africa 12/99 9225 B8+ 

Tiefcey 05/02 10.000 B 

jir'ampv.iBqNbs' •.':.£■£>' f 

Argentina 03/23 5200 B8 

Brazil 04/24 5250 BS- 

M®dco 12/19 6250 B8 

Venezuela 03/20 6.750 B+ 











+0.05 -0.12 +121 

+0.10 -021 +222 

+0.03 +0.38 +127 

v:l-. t ' i - 

+029 -003 +126 

+022 -025 +026 

+012 -025 +254 

: Ti'-r'V ejyyggsrv Jv - - ~* 

+0.02 +1.68 +123 
-ail +122 +125 

+025 -029 +120 

+0.04 -0.75 +123 

London daabO- FYleea n U8S. 
Stowed & Poor's lartops. 

Sauce: bferecfta DA/FT Warmedon. 

gilts at least until March.'' 

ITALIAN RTFs had a qui- 
eter day, as investors 
awaited the so-called 
"moment of truth” today 
with a confidence debate on 
Romano Prodi’s 17-xnonth 
old government. 

In London, the BTP future 
settled 0-36 points lower at 
11 2 .58. up from a low of 
112.46. The likely outcome is 
a compromise on Italy's aus- 
terity programme or consid- 
erable uncertainty after the 
collapse of the government 
However, given the commit- 
ment among Italian politi- 
cians to Emu, most investors 
remain persuaded the down- 
side for the market is not 
substantial The yield spread 
over bunds stayed at 70 basis 

0.35 lower at 10L5& 

quiet session ahead of 

employment data due today. 

The December contract set- 
tled Q.28 lower at 103.64, with, 
more t han 156,000 contracts 
traded. It was announced 
that industrial orders were 
up for the third successive 
month, but this was attri- 
buted to export growth 
rather than strengthening 
domestic demand. The Bund- 
esbank is still expected to 
hold interest rates this week. 

strongly on moderate vol- 
ume in early trading, push- 
ing yields back toward levels 
reached during last Friday's 
wild trading session. 

By midday the 30-yeax 
Treasury was g higher at 
101*1, sending the yield down 
to 6242 per cent The 10-year 
note rose % to lOlg, yielding 
5.933 per cent while the two- 
year note inched up & to 
10O&. yielding 5.64S per cent 

"The fundamental envi- 

ronment changed signifi- 
cantly on Friday with the 
employment report” said 
Patrick Dimick, Treasury 
marke t analyst at UBS Secu- 
rities in New York. 

The go ver nm ent reported 
lower than expected figures 
on new jobs an Friday, and 
the unemployment rate was 
4 J9 per cent in September, 
the same as in August 

Treasuries soared an the 
news, with the long bond 
gaining more than i% points 
and the yield briefly falling 
below 62 per cent before the 
market abruptly changed 
course on oQ price fears. 

Those fears were absent 
yesterday as oil prices feu 
further and the dollar 
strengthened against the 

This week’s economic 
news is dominated by the 
release of September’s pro- 
ducer price index on Friday. 

sees Liffe 
in Europe 


Contracts on uow 
Jones start trading 

By Samer Iskander 

New international bond issues 

Bank Austria 

*7*6 n r, an n n « U 1 ■ — i f, 

SHBgQOO&Cn nQ*C30gS 

Aral Cretan Me* 
m. » 

" Yhn 5.625 99.963R Oct 

Beden-WQrttamb&g L-Hn 

Swecfish Export Crtxfil(a) 

Ibn 5.625 

125 7225 

,•< :+V -v ; 


2 bn 5.00 

2bn 525 

2007 0325R +20(B%Jiin07) SslomarVWestLB 

99295R Oct 

99.78R Nov 
99.B79B Nov 

Euopean Investment Bonk 

' re *•>- AX • •- * 

lObn 5.40 

•V*v« ■ ■. *■* • 

500 13.50 

103.0525 Nov 

10120 Nov 

2007 046R +130(71496 -07) SBC WartounB OR 

2003 0.275R +11 (Q BNP/CDC Marchto 

2003 035R +34(6)403031 BNPXaocGen 

1898 0.15 - Argent wte 

•vi.-. V.. -..i j’-i - # ’r - •••: \ .. . i, 

2002 220 - Hambroe Bank 

Rnol twrra, nOn-caBabta untaas 
Fbood ro-oftar price; foes shown 
Over tasrpolatad yield. 

stated. Yield spread (over relevant 
i at re-aflar level, a) Issuers option 

government bond) at launch auppied by lead m ana ger . Ft 
to repay at 1032525% bi cash or Jan 03 Treaauy bla. q 

trading at a spread of 7 basis 
points, down from 14 points 
at launch 

CDC also said the French 
franc was one of the few sec- 
tors offering good conditions 
for issuers. 

STAGECOACH, the trans- 
port group, made its band 
market debut with a 10-year 
issue in the sterling sector. 

SBC Warburg, the lead 
manager, said it saw strong 
demand, mainly from UK 
institutional investors. 

"The issuer was already 

well known in the equity 
market,” it sa id. 

DMlbn with a 10-year matu- 
rity through lead managers 
Salomon Brothers and 
WestLB. The issue was 
priced to yield 20 basis 
points more than bunds with 
the samn maturity. Salomon 
said it was satisfied with the 
placement, although the 
spread widened marginally 
after the launch. 

E1B, the European Invest- 
ment Bank, offered R500m of 

five-year bands in the South 
African rand sector, a cur- 
rency that typically appeals 
to retail investors. 

Favourable swap rates in 
currencies s uch as the rand 
and Czech koruna allow bor- 
rowers to offer generous 
yields to investors while 
obtaining a competitive 
all-in cost of borrowing once 
the proceeds are converted 
back into dollars or D-Marks. 
The RiB’s deal, managed by 
Hambros, offered a coupon 
of 13.50 per cent 

An overwhelming 
proportion of members of 
the London International 
Financial Futures and 
Options Exchange expect 
the market to dominate 
European derivatives trad- 
ing, according to a survey 
published today. 

The survey by Futures 
and Options World, the spe- 
cialised publication, shows 
only 5 per cent expect the 
Frankfort-based Deutsche 
TerminbQrse to overtake 
Liffe. No other European 
exchange was seem as a seri- 
ous contender. 

Three-quarters of respon- 
dents also believe liffe is 
making the best prepara- 
tions for the single Euro- 
pean currency, the euro, 
although the UK has yet to 
decide whether it participate 
at an early stage. 

The survey, undertaken 
before last month’s 
announcement of a three- 
way alliance of continental 
European exchanges to chal- 
lenge Liffe's dominance, 
also shows interest rate 
d eriva t iv es are believed to 
be the most promising 
growth area. Conversely, 
around 60 per cent expect 
business in equity deriva- 
tives to stagnate or shrink. 

Opinions, however, are 
less clear cot over the choice 
of a trading sy st em. While 
84 pa* cent support Liffe’s 
commitment to open outcry, 
75 per cent are in favour of 
plans to switch equity 
options trading to its elec- 
tronic platform - APT. More 
than 40 per cent are also 
opposed to a move to larger 
premises, made necessary by 
Liffe’s strong growth- 

Last month liffe overtook 
the Chicago Board of Trade 
to become the most active 
derivatives exchange. 

Trading in derivatiTas based on the Dow Jones lndmtrto] 
Average, arguably the best-known marker for theUS^ 
stotomkZ began yesterd ay mo nung on 

Board of Trade, the largest fbtmes^^sngft^^J^eChir 

wim Bnard Potions Exchange. Although professio nal . _v 
investors have long been able to trade stock mdexftdnrw 
based on the SAP 500 index far years, thenewDow :■ 
futures a™* options have been designed with retell invra-. 

tore in mind, and much of the marketing has been tap. . . : 

acted at this potential customer base- : . 

The CBOT, which has built a new $&n pit for the Dow - 
products, has said it will devote one-third of its marketing 
budget to this area ova: the next five years. Combined . 
with the OBOE’S outlays, it is reckoned the new product*, 
will have a promotional b udget of more than $50m.. ..a,., 
record for the futures industry. . . ... _ V-'- 

Yesterday’s launch follows a decision by the Dow Jones 
company in June to licence its index to ftAracbanges. 
The Chicago Mercantile Exchange, the CBt/Ts big local 
rival unsuccessfully competed for the Dow Jones licence, 
and last month produced a “mini” version offts S&P500 
contract, valued at one-tenth of the original contract and 
aiwori at the same retail market Nikki TaU, Chicago 


Bank Hapoalim to launch MTNs 

Bank Hapoalint IsraeTs biggest bank, wffl today launch a 

$6QQm global medium-term note programme, the first by-- 
an Israeli bank. The deal, to be launched through the ~ ~ 
bank's Dutch subsidiary, is being arranged by Merrill 
Lynch. Six international investment banks are serving as 
dealers. The programme has been rated A3 by Moody's 
and A- by Standard APooris. the US rating agencies. 

Ran I? Ha pnaiim said it aimed to expand its financ i a l 
base and tap new sources of foreign currency.: Ian 
McEwen, banking analyst at Lehman Brothers, said the 
programme marked “the beginning of a long-term process 
aimed at famfliarbring international investors with the . : 
bank”. The notes, to be listed in London, will cover up to . 
23 currencies. The first issue is expected to comprise 
5200m of five-year notes. Avi MachJa, Jerusalem 


S&P revises outlook for Portugal 

The implementation of sound macroeconomic pollciet and 
progress in structural reforms could lead to an upward 
revision in Portugal's sovereign debt rating. Stan- 
dard Spoor's yesterday revised its outlook on the country 
from "stable” to “positive” and reaffirmed ite AA- ■ . 

long-term foreign currency rating and AAA grade for 
local currency debt. “A far-reaching privatisation pro- j. 
gramme, and deregulation and liberalisation erf financial 
markets have significantly improved the supply side of 
the Portuguese economy,” S&P said. - - Samer Iskandar 






Sett price Change 



EsL vol. Open lid. 









Pac Bed 








NY Tel 








Rad S&P 

dale Coupn Raring 

Day's Mth’s 
Bid ehge aige 
yield ytd ytd i 

Red- S&P Bd 

date Coupon Being price 

- Day's Mth’s Spread 
9a cfcg a • ehge t.r-.v - 
•ytd fit] yU ... Govts 

7.25 AA- 
720 A+ 
8.00 588 






Plica Oct Nov Dec Oct Nov Dec 

97 • 3.02 - 021 026 0.48 

98 220 2.13 225 025 0.18 0.73 

99 1.13 123 121 0.17 0-37 128 

100 0.47 0.71 021 021 0.75 

101 0.12 021 0.54 1.16 124 

Eat «oL total, CM rva Putt n/a . dayli op*t nt, Cfels nto Putt ntt . 

Qo rmany 

Open Sett price Change Hgh Lew 6st vol Open inL 
Dec 103.71 10324 -028 103.78 10322 156463 316408 

Mar 10220 10227 -026 10220 10223 106 6910 

■ rauMteALS : 

GECC 05/07 B.75 

Banc One 08X12 725 

US West 01X37 720 E 

WMX Tech 04/98 625 

WNMarl 05/02 6.75 

Dayton Hud 06/21 9.70 E 

■ ■CAoaicass.iTi 

FHLMC 04/07 7.14 

SLMA 03/00 720 

FIMA 02/18 825 

FFC8 06X16 625 

Stone Coot 02/01 028 

AX SB 12X11 9.13 I 

Pacaita 06X)4 10.75 




..i v*: •-. 




\ r.-.rL-.'-.w 








•- •. r. Js jiVaSM 

625 -0.03 -022 

7.18 -001 -029 

629 ' - -027 

&48 -0.01 -021 
622 -029 -024 
622 -091 -025 


626 -022 -023 

6.19 -023 -023 

726 - -026 

628 -a 01 -022 

525 -003 -028 
6.67 - -020 

624 -021 -023 


0.00 - - 

B8 02X37 5.750 AAA 1OL780O 

Spain ■ 01X17 5.750 AA 1012700 

PhNaMonie. OMM .5275 . A 992800. 

ABN Amro ~D3X)5 3228 rVa 992813 

520 +024 -020 +027 

522 +022 -025 +029 

549 -022 -0.14'. +028 

5u41 +024 ~ -022 +018 

Abbey Nat 
Cred Fbndar 


Abbey Nat 
Abbey Nat 



AAA 102.1400 





AA 104.4200 





A 1182800 





AAr 1012288 






AAA 107.1000 





AA 1044500 





A 1072000 





AAr 10(2568 




DreecfrMr Bk 

Abbey Nat 

AAA 107237B 
AA 1052559 
A+ 108.7833 
AA 882751 

+029 -OJO +028 
+027 -0.71 +023 

+024 -0.73 *0,77 

+028 -022 +025 

m BUND FUTURES OPTIONS (LIFFE) DM250J00 potato of 10 0% 

Now Yo* doattB- 









pure — 





























Sttndad & Poort ratrg*. Yttlda: wn l o n al bwtt. 

Sowce: Wnrecttre Dare/FT brionneCon. 



AAA 1052761 
AA- 1034844 
A+ 1026659 
A+ 1002379 

+026 -028 +046 

+026 -023 +068 

+025 -021 +068 

+024 -0.12 >.>021. 


Ear. voL UttL Cafe 32SZ7 Putt 3*544. Prevtou* open It, Cola 17595* Puts 1S5178 

(DTB) DM260200 lOOOfe of 100H 


Fa&hnds M Mevartkn 

Treasury BSs and Bond YMfe 

OMoana Two year 

8*a Tannafe Uveayaa' 

7^* Ttowaonai 521 Rvejear 

61* Sh rata* 520 lO+wr 

- Ciay» 527 30-year 

Open Sett price Change Hl^i Low Eat vd Open Int 
10421 10422 +022 104.49 104.12 105222 294212 

Beyer L~Bk 08X14 9200 AAA 122.1896 
Toronto 05X14 8200 AA+ 116.7680 

Bet Canada 07/99 10625 A+ 1102164 

08/02 6275 AAA 108.1173 


IJq WcridBank 03XS 5250 AAA 1172700 

524 Spain 03X12 5.750 AA 1192000 

025 Cred Fonder 06X12 4.750 A 1142831 

BNy 07/96 0.703 AA 100^78 

- -024 +027 

+022 -049 +024 
+021 -025 -0.10 ' 

+022 -041 -027 

-021 -021 +021 

-024 -025 +026 

-023 -aiH +020 
-021 -028 -028 

leaden doamp. 

Standard & Poor^ lattngL Vtakte Local merHet 

feaaoa: Maraoha Oate/FT Wonnttion 



(UFFgy Ub 200m lOOttw of 100% 

Open Sett price Change High Low Est vd Open int 
Dec 112.75 11223 -026 11X03 112.46 47738 125737 

Her 11248 -0.38 0 1326 


Strike — CALLS ■■ PUTS ■ 

FTSE Actuaries Qovt. Securities 

Price Indices 
UK 0*ta 

Oct 6 charge % Oct 3 interact 

Accrued xd ad}. 

2 5-16 years (2C0 





















5 AS stocks (48) 

Index B nh o d 

EaL woL toad. Cafe 5608 Puta 6B3& Pievtous opm taL. Qds 10S085 Putt 063+0 



Open Sea price Change High Low Esl voL Open inL 
Dec 104.78 10426 -0.35 104.78 10443 78,342 82272 

6 Up to 5 years (2) 

7 Over 5 years 110) 

8 At stocks (12) 

































821 5yra 
847 15 yra 
8.77 20 yra 
9.50 ErrecLT 

UK Indices 

— Low coupon yield-* - Median ootfeon yield - — Mgh coiroonyMd— : 

Oct6 Oct 3 Yr. ago Oct B Oot 3 YT. ago Oct 6 Oct3Yr. fejo 

626 827 629 649 640 628 823 S45 ' 725 ' 

629 820 723 626 628 7.75 '641 827 “720 

829 820 727 828 820 - 725. 641 827 7,80 ‘ 

845 649 727 . . ’ 

— laflallonS* — 
Oct 6 Oct 3 VL ago 

522 Up to 5 yra 
4.70 Over S yra 

— Mfartkm 10% — 
Oct 6 Oct 3 Yr. ego 

22 2 .227 2.13 
224 226 325 

Avarape doaa ledensdon ytaktt are thmm above. Coupon Bands: Lxmr 096-74*%: Madkarc IM-1HH; H^h: life and ovv. T Fki ylekL ytd Yter to data. 

■ NOTIONAL UK Q8.T FUTURES PJFFg* £50,000 32nda al 10OH 

Open Sett price Change High Low EsL vol Open int 
Oec 121-07 100-27 -0-Z5 121-10 120-20 77979 1972B7 

Mer 120-26 120-25 -0-24 120-26 120-23 1108 25 

FT Fixed Interest Indices '. *• v 

03 * 003 Qc * 2 rtgtf W Oct* Oct 3 Oct 2 Oct 1 Sep30Yt^ lot r 

Oovt Sees. (UK) 10123 101.83 10120 100.67 10028 9428 101.83 9331 R»d totenet 13329 13220 13128 1312S +«as'++adi +,= ~ 

° PTSE.^VBbonWJJd 1W7. Al Itffe meerved. • ter 1BB7. Qowmmant SacuKa* hKjh atece compfetkxr 12740 {09/01/39. tew 48.18 FIaadfr*£aL 11532 

ewnpfertei x 13347 pi/Dl/M). law 5053 P3/UV75L 

H fed PrittE + or- 

IMK K fed NreE+rr- 

_ 52 wadr— 
Moh Low 

■ LONG car FUTURES OPTIONS (UFFS £50200 64ths 0(100% 



































Eai. wt tdaL Cafe 8901 Pula 3817. Pleotaus daytt ap«a bs. Cafe 54229 Putt 29416 



Open Secorfce Change High Low E at . vd. Open W. 
Dec 8920 99.10 -0.18 9920 9920 165 6296 

Saatt" &fraa ae toRfe fetta) 

Bab I tot 1997 14JM 

Trass TSBBtt 4.00 

Ejttsiipc 1988 Lee 

fas Pape 1996$ 724 

Tiss15r»C9Bft 1427 

Eadl12R189B 11.41 

TVfesWU* 1919)4 &23 

Trass ftofebiasatt- 
Exeta TZWc1BS9 — — _ 11.43 

TibsKPseIBH 858 

Trass 6pe 1MB # 6.09 

Cwim+pe 1989 B53 

6.73 100» -A 

673 115% 

MB 1C* 

MB 1064 -A 

7J05 -lOTh -i t 

707 1(5£ -i 
7J35 ^ -i t 

- IDOi +A 

708 1U7i -i 

701 1E£ -i 
B2S say -4 
7J1 106% -& 

115% 113% 
10*3 10OA 
io*i il»i 
116% 107% 
110H 1054 
106H 97H 

I0Q& OS 
1T2U 107 A 
108% 105* 

aw, 9® 

110i 106% 

■ US TREASURY BOND FUTURES (CRT) S1CX3.000 32nds 0 1 100% 







Open inL 

























Trass 8%pcHDC i 



Tibs 14pe 19SB-1 

Haas ape OTO# 

Iras Fte feta axn - 

Haas lOpc 2001 — 

Com 9%pc2an#— 4 
Cent 9%pc 2081 _jJ. 

Tea 7pc 3001 ft 

bd» 12pc 18BB-C.— i 
c#w 1 (be 2002 — . — * 
Ti*fe fee 2002# 

622 MS 103JJ 

UO 667 1D4JJ 

1128 M3 115% -% 

1344 7in 1044 -4 

772 6J9 10% -% 

- 100A 

9.11 MB 109H -% 

0.71 870 109% -4 

SS 668 110% -4 

669 U9 101U -il 

1123 769 105)1 -4 

&61 B491l3%d -a 

Ut 640 102% -4 

19*4 10® 
107% ItOB 
120% IMS 
111% 1044 
1044 KB 
W. 9BB 
109B 1074 
non 106% 
Itmi 964 
1064 105)1 
1130 I09U 

(ecu mi 

Tran igic 2003 

Trass 11 %pe 2001 -4 

TiaalQjK 2004, } 

Rnfafl3>sc TB99-4_ 

Cm 9%pc20D4 


Cam 9%pe 2DQ5, 

EK&KPapcans — * 

Trass I2%pe 2003-6. 

Tress 8%pe 2005ft 

Cm»3%pc2008 i 

Tress 7%pe200Sfct__ 


Trees ii%ec 2003-7 

Tress 6%pc 2007# 



Treat fee 2006# 

Trees afeaBB. ■■ 

Tha* B%pe 2010# 

Cere fee la 2011# 

Treat fee 2DI2B, 

Traas 5%fC 2S08-12tt_ 

Tran 7%pe 201 2-1 3»_ 



































































*-■ ' -StiMk-: 

t2)Mȣ +v- IBS: ter- 



VSl’S — — =r* in MS W7S +% 1«W mi 

ISSrrSJ % S S? K 

4%rei>m_4i»« 262 M4 ^ ^ nu 

fSr=sa s 

gape^fl,.. (83J ) SJB 3,17 186X +43 m 

— 035.1) 503. 117 136% +fi-136%-1«« 

asa its 

849 1234 
536 41% 
626 1074 

660 136B 

632 113% 
867 96B 

837 123H 
«23 914 

642 1124 

114% 1(0% 
894 B6B 

4%pC30ft__Tt35T) . 503;: 

ftwpecOve fe d empe o n tea on r ~ +— +r! HMdn'dfrt) 
1°??* * **- ^ ngurea <" PmntaeSISns RP1 taaeti' 
“■JVfeBinortheplor a taaua) and bare boSn MMtatf te 
10 100 te FUxirey 1907. Caamrioe 
tow 1945 HP! tor January 1897: 184+t and far feiprat 18071. 

1244 ion 
12® 1094 
93% 79% 
U2C 964 


Treat B%pc2017t^ 

Ere* 12*2013-17 « 

Treas 5pc 2071 tt 

860 628 116U 
620 824 117% 

894 uo 136% 
771 642 155% 

685 623 1204 



flJFE) YlOOm lOOOia of 10096 

Open Close Change t-Sgh Lew EaL vol Open InL 

1ZM* 129.61 12953 3838 re 

128 12037 12873 1817 no 

* UFFE fcAns ttao traded on APT. AO Qpan kens tigs, am tor pavtoua fey. 

RrebRteaa Teres 

Cm9%fE2DD2 * 

Tress 9%oc 2002 

Eidi fee 2002.. — ^ 

Cn 9%pezao3tf. ^ 


Tub 13%pE20nt-3 

• Tap* Stock. « Tax 
radaipp to ynkto rear 

649 Gin 111)3 -£ 

680 MS mg -4 

an 45i non -B 

648 851 1I4H 

744 840 107% -S 

11.72 862 1174 -% 

c-frea to nan+a sJ d a itt an bd 
cfexfeted by HSBC tom 

i«% 106% Gnfefee 

132% 100% terlBtaPMKtt .. 
111% 108,’, Cow 3%pc VI tt. __ 
115% 110JJ Trew 3pCBB«L__ 
lOm 1024 nssafe gLae - 

itW fa»2*as 

683 - 604+2% 

- 54ft -4 

mi - n* +u 

685 - 43U +fi 

6« - 68» +« 

654 - 38% +5 

erton- E Aictton boatt. ad Ex cMfereL Ooclng mid-piteaf rea 
I tram Brett « Engtond ekaring prices « haihre^lSr 

, ° | herFtadh rtw « 

a a ^ S *s- 

1SB% UB% m * a ** 6st 

'714 law fe9Btono%j*a»8— 7 si as 

6%reall%pe20l2 818 72 

48% l>arpodJ%pehad.— 7 joo . . 

8«% cy ur tec •a an 

OH M 8J3 72 

*3 MstVY-tecV — 153 sj 

^ 5“ r * U# *W»3%9Ca)21. - 3JI 

»• MA 4%peiaB4_-_ - IV 

i rUM 

fe fed Rfca£+w- 

4fel» . toe 

72) 853 12B% 

818 720 *40% 

Ml • • - W3% . _ 
MW • - V 80 

068 -^43 

873 720U1%|6- _ 

153 550 'M; 

- 170 1524 • :* 

- 4J2 M7% L_ 

*0wi to powife par 9100 nonirw of asoat Psofetofe j 

140% '125% 

w% ran 

- « .a 

t»% m% . 

•; -85. Wi, . 

UZ4 : 



***&?&£? >-, 

A«t?w lr"^' ar^>" ! 

6*T£i*- - .. ' . I 

-«. **** ; r l - ^ 

«.*(£*< «. v 

*S£i“-*u-... '■* 

=*aj<i *../•■ - .7 --. .. 

; v . if 

m£££~S^ [ 

’: ‘ ’2j: .-:«! 

to launch AfTs 

':***■ :^£- 

-~i. _2 .._ 

^_~: \ v^^‘- j 
,,, „.. ■., •■«» 



Ifr j jR BUJ.i Iay--. 

ir, U— ■ 


c f° r Portugjj 

PWW ’V-.-j- 




m/* *■■* 

IW£sn ■ 



U’f-.: *ra*ur 
'■.Hi.' w i-r 3 

. w. 'T* IK 
■Mm 1 

: „m .1 ■->-+.». . 

j j*» -.:• r.*Ju.- 

«*»- •+- - -?- 

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*• _ . •■ 

:• jet-*' ; 



By Rfchgrd Adams 

T^ejitpilaa Ura yesterday 
coxtiDded to weaken against 
the D-Mark on „ foreign 
exchange markets, spurred 
on by contlnuiug political 

Hie Italian currency lost a 
-Era against the D-Mark to 
close at L880.6 by the end of 
trading in London. The lira 
had suffered against the 
D-Mark in early trading bat 
recovered by nearly four lira 
as Fausto Bertinotti, the 
leader of the parliamentary 
communists, began i-aifrg 
with- Romano- Prodi, the 
prime minister, to try to set- 
tle the dispute over the Kal- 
ian budget. 

Traders are hoping the 
two politicians can compro- 
mise over the 1998 budget, 
which is opposed by the 
Communists, on whom the 
government relies for a par- 
liamentary majority. 

Analysts at Deutsche Mor- 

budget debate keep lira weak 

gan Grenfell in London said: 
“Given the stakes, it is no- 
one’s interest to see the col- 
lapse of the Prodi govern- 
ment. Therefore the odds 
would 6eem to still fevour 
some kind of compromise.” 

But even at L980, the lira 
is still nearly one per rent 
stronger than its central rate 
against the D-Mark in the 
European exchange rate 


The D-Mark *8 weakness - 
caused by another leak of 
rising German unemploy- 
ment figures - helped the 
US dollar, which had lost 
ground against it late last 
week. The dollar rallied to 
DMi. 7632, a slight improve- 
ment from the Europe a n 
close on Friday. 

The market was also wary 
yesterday . of an announce- 

■ Pomd tn Hare Vocfc 

Oct 6 —latest— 

Espct 14135 

1 Mb 14113 

3 mtt 14075 

1*r 15892 

-Prw. dose - 
141 BO 

utent by the Bundesbank of 
a switch to a variable rate 
securities repurchase rate, 
although few thought it 

■ There was some sailing of 
sterling in later London trad- 
ing. after a report quoted an 
unnamed French official say- 
ing the UK was considering 
joining the single European 
currency in 1999. 

But sterling rebounded 
after Dominique Strauss- 
Kahn, the French finance 
minister, said the UK is not 
“o priori" seeking to be in 
monetary union by the first 
round in 1999, as he met Gor- 
don Brown, the chancellor. 

The comment allowed ster- 
ling to recover by nearly 
two-thirds of a pfennig from 
the lows it set in the wake of 
the earlier wire report The 
pound ended at DM2.8423, 
compared to its closing rate 
of DM2.8411 last week. 

Earlier in the day, sterling 
had been buffeted by official 
statistics showing a slight 

Hew Zealand doftar 

Against tiw doter (NZ£ per$l 

1A0 : 1 — 

140 V 'i . ' > » — » 

■ Apr: I** 7 Oct 

"liiim n^teiliiiinr 

downturn In industrial out- 
put during August, which 
made the chances of an 
interest rate rise later this 
week less likely. 

But sterling may have 
been helped by a survey say- 
ing UK public opinion was 
still largely against joining a 
single currency. 

■ The New Zealand dollar 
tumbled during trading in 

the Asian markets and in 
London, after news that the 
country's balance of pay- 
ments deficit in the year to 
June was a record NZS6bn 
f$3.8bn), due increased 

By the close of trading in 
London, the Kiwi bad shed 
over two cents against ster- 
ling, and 1.25 cents against 
the US dollar. The New Zea- 
land dollar closed against 
the pound at NZ&5367, and 
against the US dollar at 

Brian Marber, an indepen- 
dent technical analyst in 
London, said the New Zea- 
land dollar's rally high of 
$0.6427 on Thursday looked 
like becoming a ‘doable top' 
yesterday. He told his clients 

Odts E s 

Cadi Ite 5341 58 - 511212324780 - 32.9250 
HB03J 314.712 - 314468 195.170 • 195220 
kaa 484&20 - 483750 300040 - 300040 
ftim» 0.4907 - 04911 04043 - 03044 

POOH 55131 • 55211 3.4100 - 14220 

Asia 945741 • 946542 588540 • 588740 
UAE 55226 - 09260 36729 - 34730 

that a close at $0.6355 or 
below would break the rally 
uptrend, and leave the Kiwi 
vulnerable to a return to its 
recent $0.6300 low. 

Mr Marber also recom- 
mended staying short of the 
Australian dollar against its 
US counterpart. 

■ The Malaysian ringgit 
showed some signs of recov- 
ery yesterday, with publica- 
tion of a healthy M$l-2bn 
current account surplus for 
August - a contrast to July’s 
M$900m. The ringgit closed 
at 3J3650 against the US dol- 
lar in London. 

However, the Indonesian 
rupiah continued to weaken, 
as rumours circulated 
around the market that 
$100m was spent to defend 
the currency. 

The rupiah was at one 
point down by 9 per cent 
a gains t the dollar since Fri- 
day, and yesterday was the 
seventh consecutive day that 
th» rupiah has reached “his- 
toric” lows in trading. 

■ SUBOR FT London 

HartttnkfWna 5W 5g 5g 

US Dote COc - M3 547 5S L83 

ECUUnkodDs 44 44 4« 4£ 

SDH LMcod Ds - 3fi 3fi » 3» 

S LSOR fc o ortonk teg an an <ftnd nna tar Si On quoad to On ooM by tour 
rotaraoca barta it 11am each wntog dqr- Tbe bonks m Bstes Too. Bank cl Tokyo 
MsUML Bwte* and NWtonol Wnamk i aor, 

MU nw no IM tor mo Hant&C Many ten UES Ota. ECU l SDK Urtnd Dopoofea fi*. 


OetS Short 7 days Ora Tinea Sbc Ons 

term nodes month months months yur 

Belgian Franc ah - 3ft 3$i - 31i - a£ 30 - 3fl 3» - ® 

Danish Kit» 3H - 3>4 3« - 3^ 3H-312 3fl-3fi 3B-3* 4£-4 

German Msrtc 3^-3 3A-3& 3'a - 3lt 3i3-3* 3*2 - 3, 7 « 3g - 3U 

Dutch QoBOar 3la-3 3&-3£ 3<4-3lg 3* - 3^ 3U - 3U 3&-3S 

French Franc 3*-3i 3ft - 3£ 3A - 3i 3H-3& Sll-SB 3S - 

PonupMMEsc. SH-SB 5B-5H 5*3 - 3} 5& • 5£ - ^3 43 -4% 

Spanish Peaatt 6A - 5 5* - Si Si - SA S>, - Si Si - 5 4 ^ - A& 

Stertno 7A - 7>4 - 7H n* - 71, 77, - 7«q 7& - 7 ft Tfc - 7& 

Swiss Franc 1^2-1 ljJ-1* H3-1& lA - l,i lfl-U3 1 B- 1 B 

Crate Dote 3>a - Sh 3J3 - 3*3 ah -3h - a A 3% - 3k 41 ,- 41 , 

US Dote 9A-&, 7 C 5A-SB 55, -5ft Sk -53 5h-5ji 5» - 5}2 

Ate Lira 7,1-6,; 7*8 -7A 64,-643 6*5 - fUj eft - 6* 5g - 5{i 

JeponaaaYan h-]i h - 13 3 - H 3-B 3-B 3-3 

Asian SSIng 1% - IV 2 *b - 2^ 3ft - 3ft 3ft - 3ft 3% - 34, 41,-4 

Short torm mu am cU tor tna UB Dote and Yea adnra: two days' noboa. 

■ THREE MOUTH PIOOH RiTURTO [MATTyaris Interbank Ottered rate 

























' Canada - 

^SSnt **? °«* Threo monte One year Bar* of 

on day spread tow Rate 9tPA Rato %PA Rata jtPAEng. Indm 

{Sch) 200021 4U008 VII - 

(BFr) 504855 404217 144 - 
(DKl) 104224 404071 178 - 
(FM) 05198 -04007 132 - 
tFFr) 05559 404083 518 - 
(DM) 24423 404012 400 - 
(Dr) -448412 40.162 591 - 
pe) 1.1068 -04027 057- 
. (L) 2787.14 44.1 576 - 

(LA) S&5655 404217 144 - 
(FI) 02014 404013 997 - 
<M0) 11-3993 404288 657 - 
£3) 289479 +0.436 718 - 

(Pta) 240.104 *0.168 072 • 

(SKr) 12.1410 40.0051 336 - 
(SFr) 24430 404035 417 - 

n - - 

- 14512 +04014 501 - 

- 1,179008 . - 

131 204451 184068 104477 34 19435 34 194295 3.4 

165 584940 502260 504856 07 501166 34 34 

Z70 104509 10.7754 107900 34 107299 34 10A354 34 

260 84470 04890 84943 34 04418 07 02291 04 

602 94782 04052 94220 4.1 04659 34 01904 08 

436 24727 24274 24329 09 24139 44 2.727 4.1 

042 450368 447407 450495 -44 450319 -00 461487 -24 

081 1-1095 1.1051 1.1064 04 1.105 0.7 14B41 12 

8S2 2795.13 277346 278742 04 2787.18 04 278449 0.1 

165 584940 502260 504855 07 501155 08 584655 34 

031 02099 01880 01012 08 01703 00 00743 44 

729 114186 114093 114368 04 110758 03 114068 32 

041 290462 280300 289723 04 289.183 04 285.105 14 

235 240.790 239460 239.789 14 230430 14 234469 03 

'Argentina (Peso) 1.6127 +04017 122- 

BrazH IPS) 1.7694 +04019 688 - 

Canada • (CS) 20116 +04005 106 - ; 
Mogdca (New Peso) 124140 +0417 033 - 

USA 9) 14130 +0401 125 - 

PadBrtUBthMe Bart/AMca 
Austrafa . (AS) 2.2230 +04147 266 
Hong Kong (HKS) 1247BB +04049 743 - 

Ida pa) 584525 +00464 998 - 

Israel ■ (St*) 54376 -04068 296 - . 

Japan (V) 196412 -0771 209 - 

Malaysia . (MS) 5A27B +00072 180 - ; 
New Zealand JIBS) 24867 +00216 348-; 
PMpptam (Paso) 564068 +02671 085 - 1 

Sard Ante ' (SR) 64485 +04034 477 - 

Singapore ' ' (3S) 2A968 + 0.0111 953 - ! 

South Africa (R) 74286 +04D12 238 - ! 

South Korea (Wop)' 147444 +087 060 - 

Taiwan (13) 401191 +00135 948 - - 

Tinted (BQ 59.1147 +04879 369 - I 













































• " 






























221 BB 




















Mexico (New Peso) 










USA (S) 

PBGNWMdria East// 





















Hong Kong 



Ctaaing Change Bid/offer 
mU-point on day spread 

! 976 - 043 
500 - 330 
067 - 107 
■ 795 - 845 
235 - 255 
618 • 625 
190 - 320 
SCO - 583 
>780 - 835 
500 - 930 
843 - 553 
485 - 490 
670 - 770 
820 - 000 
247 - 297 
522 - 530 
125 - 134 
110 - 120 

964 Ireland 
702 Italy 
1020 Luxemburg 
101.7 Netherlands 
1004 Norway 
801 Portugal 
770 Spain 

-051 505520 582999 564477 -44 584483 -4.1 60428 -09 

■ 456 54518 54296 - - - - - 

- 415 197440 196209 195292 62 199267 62 184282 01 

■372 5j4716 50881 04318 -00 04398 -04 04585 -00 

■388 24464 24247 24399 -14 24437 -1.1 24443 -00 

-046 574734 601793 507664 -04 570159 -24 584729 -24 

■ 512 64721 64477 6446 07 64378 04 64011 00 

■ 983 24124 24896 24922 22 24821 24 24339 24 

■330 74582 74100 74882 -07 72071 -94 01441 -82 

- 787 148074 147040 - - - ' - - - 

tmM tar Ooi3. BHbteapmik kite Fornd Spot 
■e hnpfcd by cun* terete ratee. 8hdn tadac re 
Itetrere to teh M* ate the DoteBpot Mtea dera, 
IfHeHCtnogantas printed h Hite lafite an efaomtel 

-432 462807 464821 401026 04 464628 

-925 502825 522260 594513 -64 584129 
Mbto thorn ctfyte te tree rteckret pteeac. Fctwad ate — 
toted by te.ftank of B«M> Bret maps 1690 - 100. 1 
■ on ttw hnrnM tt m FTjxmt 

04 454651 0.6 
-54 804431 -01 
not tteedy quote to te nretat but 
ndre tend IAOGl B4 Olter «nd 
in n nunted by te F.T. 

Me (Rs) 38.1775 +04075 550 

terael (Shk) 04052 -00063 812 

Japan (Y) 121.710 -045 680 

Mei^fSte (M$) 03650 +00025 600 

New Zealand (NZS) 14727 +00125 718- 

Ptfippines CPeao) 354850 +0.145 ZOO • 

Saud Arte (SR) 07506 -00001 505 

Shgapore (SS) 14480 +0406 475 

South Africa (FQ 44875 -0402 660- 

South Korea (Won) 914400 • 000 ■ 

Taiwan [U] 284930 -04085 880 

Hated. (BO 306500 +025 500 

t 80fi tea par S tar Oct 0 BMWtar In » 

quoted to te markat but am In pl o d by curare tree 
Base pierage isotWIOO. 

The occhange rate prtted in this tabta are ateo awa 

Day’s mid 

On* (north 

Tfaraa marthk 

One year 

JP Morgen 

















24 1003 



































04 1044 

1 .7848 







26 1000 



































24 1003 








24 1016 








02 1001 
















147 465 










































































• - 
















































44 1266 















































































iq m 




Open Sett pries Change Hjyi Low EsL vcfl Open btt. 





















1 (UFFET LlOOOm points of 100W 


Sett price Change 



Est uol 

Open tot 




-047 ' 































Sett price Change 



Bri. vd Open tot 



-n ro 



























Open Sett price Change High Low EsL. woi Open tot. 
Dec 9947 - 0 na 

Mar 9945 - 0 na 

Jun 9940 - 0 na 


Sett price Change 



Est wot Open InL 













95 A4 












■ LFFE luuea ate taM on AFT 

■ EUROURA OPTIONS (UFFE) LlOOOm pointa of 100% 

1 Do te Spot tabta show only te tan three dBcfcnai ptaoas. r cneei d rate oe not dbectiy 
w rate. UK katend A ECU am rente! in US cwrancy. JP. Morgan noiM M eta Oct 0 

ifato on te totarrat ■ HtpJhmwrmFTjoom 




- CALLS - 






















Ere. voL total, Cret9 0061 tea 6002. Piteous Oaf% open InL, Ctata 227178 Pure 85438 



Oct 6 . BFr DKr ■ FRr DM K L H MCr 

Belgian (BFr) . 100 1045 1629 4445 1487 4751 5457 1908 

Denmark (DKr) 5421 10 8430 0626 1423 2575 0958 1051 

Franco (FFr) .6108 .1103 10 0874 1.158 2917 0350 1140 

Germany (DM) 2064 0808 0362 1 .0389 9608 -1.126 4400 

Ireland (K) 5000 9.777 6433 0568 1 2516 0692 1027 

Italy 0) 0105 0388 ' 0343 0.102 0040 100 0115 0408 

Nether la nd s (FI) 1803 0381 0985 0888 0046 8706 1 0551 

Norway . (NKr) 51.60 9419 8406 0500 0474 2451 0816 10 

PtYtugto (Ea) 2024 0733 0297 0981 0382 9810 1.104 0922 

Spain (Pta) 2443 4007 0980 1.184 0461 1161 1033 4035 

Sweden (SKr) 4602 0914 7071 0341 0912 2286 0837 9084 

Switzerland (SFr) 2544 4419 4479 1213 0472 1190 1086 4063 

UK (Q 5807 1002 9056 0842 1.107 2787 02u. 1107 

Canada (03) 2053 4493 4021 1285 0400 1260 1446 5.141 

USA (S) 3607 0710 5926 1.762 0686 1728 1485 7449 

Jtipan (V) 2948 5413 4468 1448 0464 1420 1431 0791 

Ecu - 4043 7458 648S 1458 0.7B3 1921 0206 7435 

CWte Xnnr. French Franc, Nonragtoi Kroner, red teaAft Krenar par ip BMprei Franc Yrev Eaotoc Ua r 
■ P M A RK RITUHES (IMM) DM 126400 par DM 



- Ffir 















. 100 








































































































































■ 2034 

























































































































































1 (IMM) Yen 124m per Yen 100 


Est wk Open tot 

































ITUNES (IMM) SFr 125.000 per SF¥ 

06960 +04002 04963 06943 14073 35479 


M STBSJMO FUTURES 0AO4) £62000 par £ 

United Kingdom 


Floating Rate Notes Due 2001 

In accordance with the provisions of the Notes, notice is 
hereby given that, for the Interest Period commencing on 
(and including) 7th October 1997 to (but excluding) 
7th January 199S, the Rule of Interest applicable to the 
Notes will be 5.50 per cent, per annum. The Interest 
Payment Date for Coupon No.5 will be 7tb January 1998, 
and die Interest Amounts will be US$14.06 on Notes of 
US$1,000 in principal amount, US$140.56 cm Notes of 
US$10,000 in principal amount, US$1405.56 on Notes of 
US$100,000 in principal amount and US$14055.56 on 
Notes of US$1,000,000 in principal amount. 

Bank of England 

Agent Bank 

7 October 1997 




totatankStorttoQ A -612 7ft -7ft 7ft-7ft 7H-7S 7h - 7 h 7J, - 7£ 
Staring COa - - - 7ft - 7 7ft- - 7ft Tfl * 7ft 7« 7» 

SSTSh®. ' .. -.Vt'gk - 

t ga it adhortty (tops. 6% - &V 7-6% ; 7ft - 7 7ft - 7*, 7ft - 7ft 7fi - 7ft 
Dbcount Mreittt daps 6{S - 63 ? • . ’ 

IKtiwirabarahtelenctooittiTp^^h™*® 7 '' 1 ® 7 

Up M 1 1-3 3-8 frg »-ia 

• • . month mo nt h months months months 



O e ni re* y 










• +131 










































FRANCE 9,034 93 


Houm DM Mb 7iyE tram Ore 1, 1W 

NON ERM kffl-BStS 

Ecu crekral ra are by te Euepren Corentete. Curarete as h drecaaong ratate 

Freaate rtregte tar Bus a pate ellan ^ < * BnB> ^ ^r^^rX?[£5 , r5 e, ^iS , ra^ 1 fcJ? 0 
,re— reitetetetatepreBreW Nte g kre i ra teteuta mate «d Ere, rente rrere tar « 
reram and te irrexknrai pretered preerera dwbdon re te “ 

craSrato. i7«Wa aretog aaprestod hnm EAM. A*teirera eataaarej by te FteneM Tinas. 

N HN A BB P —A SC tf% OPTION* E31 250 (eenta per pound) 

In September, Carrefour opened its IF, 16T and 
17 * stores in Taiwan (Chia Yi, 143200 square feet, 
Chu Pei, 68,900 square feet and Kste Hse, 
136.700 square feet). 

Introducing the 
mini-S&P 500* 
futures contract* 

And a special deal to help 
you start trading it. 


The new mHa-S&P site 

perfeg are for the incfivatoal 

inwfloc It's a mote afodahie 

way to hade stock indexes, 
widl a natgin cf abouT S2.000. 

Ifs a way to balance your 
podibfio — a practical way to 
to thnmum oaatto 
your fcqg-emi invcsaoaaa. 

B cctroufcj By traded 

Yoa can wrech tradtag over 
te liki n pire dmnti taremrL 
de-dodL You cm sec each tad 
and offer — ask happens — 
rei te Hhap , M wjj |«lilK 
Dxhm g c redarae. 
wwwanexcan. You can »Lo 
see toe last sale and how the 
maria responds. 

Hear stodc index trading anion 
live from the S&P pal with 
our audio toadoct coDueday. 
It’s die doarat you ran get to 
the acdoa withou t being rigla 
on the float Tiy it ficc. to 

CaU us 

V you hue a reason to trade 
fitonea yon haven reason to 
te a Lind astonicrW: offer 
the bea service, B,6r tower 
price. And ram tfaraugh ite 
cud of the toe we’ie efieriog 
aveqr apodal rnmui a rinn 
rate bribe mmi-SAP fanes 

B ream nni— i ^ni iM r 



CaU us fbrmae adbnzredoa. 


DtaiART souae -a-u gbuwbul art. • unnon eciy ot 

For infexmarioe in tbc UK cttlh Gunnauy: 0130-818100 

0800-262-472 EZSV-V-- Fbx; 0171-256-2445 

Fotaies mdmg revohres the risk of tora, even gresao- than die 
original mveomeaL May nor be mkride for alL 

6910 105416 


- CALLS - 



— PUTS - 




















get re. totoL 600 M* 1380. 

nteoua drart oprei tot, CM* 19M® F>re* 

Ptetoire d^a vA. CM, « Pias 400 . Prw. teyto open tt. Odto 28055 Pitt 23006 
■ f f M»re« a m «E aM8ARK/> ORTMHIS OM620OQ (S per DM) 


price Oc* Nw Dec Oct Nov Dac 

- 1.00 141 148 010 041 056 

0085 002 1.09 1-38 021 007 0.75 

0570 034 061 1-10 041 0.79 047 

ftmfaua voL. Crito <83 Pure S0OG . wre. tto/k op« na, CM* 1104BPUB 38408 

MONTH WRODOUJUt DMM) Sim ports tf 100*, 

Floating Rate Subordinated Notes due 2005 

Notice is hereby given that for the six months interest 
period fittna October 3, 1997 to April 3, 1998 (182 days) 
the Notes will carry an interest rate of 8.04141%. The 
in terest payable on the relevant interest payment date 
April 3, 1998 will be £4,009.69 per £100,000 

base lending rates 

Adan&compw 7SX> 
AM Moll Bank (G8) 740 
Mfeny Ansbactar 740 
Banco BSmc Vizcaya 740 
BarfcofCypn* 7W 
Bar* Cf Ireland 7.00 
Baikaftnda 7 -°° 

Banket Scotland 7.00 
BarctoyaBank 740 

■ Bit Bfc of MM East 740 
•Bran 9*fey ttebt 7M 

■ CttfaaricNA 740 

"CWasdalaBank 740 
Thu Owpoaftra BB*740 
CtUS ECo 740 

Qpius Popular Bar* 740- 
Duncan Laredo 740 

ExetorTlUNLknBad 000 
OnanrialS Gen Bank &00 
reft jn mfB Mahon 740 
VWIbBBriL flGAjrtch 740 
•HankxwBank 7.00 
HoXafato s Gen hr Bt74Q 
C-HtravaCo 740 

Hongkong S3fSBi(^el740 

jufian Hodge Bank 740 

elaopott Jreeph 6 Son 740 
Lloyds Bank 740 

Mdand Baric 740 
NBtWtetmititN 700 
•Raa adhere 740 
toys! Bk of Scdtand 740 
geoteh Widoreu Berit 740 

•etoger 6 Rfedhnder 740 
Sun Beridng Cap Ud 740 
TSB 740 

UrMd Bark of Kureak. 740 
UrityTnretBsricPta 740 
wlAaawqrLBUare 740 
Yorkshire Bank 740 

• Marina of tendon 
inywmwnt Barring 

J » uM ii <Atf ni i 

• taackrintotcilton 

Al Oppn barest Kga. are tor prericus day 



Pdce Oct Non Deo Mar Oct Nov Dec 
9600 045 045 046 6-28 0 0 041 

ran 02i - 02) 023 012 041 001 043 

9650 041 043 005 048 006 008 0.10 

BS75 0 O 041 041 030 030 001 

0700 0 0 0 0 005 005 005 

Esl mL tout CM, 6B7D fUs 2001. nwtouc daY* open ka. Crib 2B6raTPuto : 
■ BUM SWISS fflANC OPTKHM {UFPE) SFr 1m points of lOOtt 

ias. fiOQyoooyooo 

- Dec 

- CALLS “ 














Statens Bostadsfinareterlngsaktieb ol aftSBAB 

AurarafOiUMM%li te Ktai^morsteflbnj 

SubordnaM Floating Rate Notes due October 2002 

Ffadca to harafay gfvan that tortharix manta Mresst Par ted bom Oacbar 7. 
1BB7 at Aprs 7. 1996 tha Pteiaa «■ aany on kttaa rare of 06878% pre annum. 
The totareat paya&te on ifa reiavart Ham payment data April 7. 1996 wB 
be U4. $143.77 and U0. $207545 respaetkraty terkbto* to denomtoaBonoof 
$0000 and U0 . 9100000 
BysThaCTiMk Nreihatfi Btek 

Lrenrian.AgaMBai* ft CHASE 

October 7,1997 w 

The Financial Times plansto publish a Survey on 


on Monday, November 3 

For further information, please 

Maria McCoy 
Tel: +44 171873 3746 
Fax: +44 171 873 3062 
Penny Scott 
Tel: +212 745 1346 
Fax: +212 319 0704 

or your usual Financial Times representative 


Ere. ««L atri, Cato SO Pub 0. Prevteia «toyto W- CM* 30?5 Pres 2M9 





Rises seen in 
zinc, nickel 
and tin prices 




By Kenneth Goodrng, 
Mining Correspondent 

By Kenneth Goocfing 

Higher nickel, zinc and tin 
prices were forecast yester- 
day at a seminar organised 
by the London Metal 
Exchange to mark the open- 
ing of Metals Week. Alumin- 
ium prices would be flat, 
copper and lead prices would 


In addition, Andy Smith of 
Metallgesellsdhaff s offshoot 
MG Metal and Commodity, 
predicted that the LME's alu- 
minium alloy contract, 
launched five years ago. 
would have a new lease of 
life in 1998. 

Angus MacMillan, head of 
research at Billiton Metals, 
suggested the aluminium 
market would be rou g h l y in 
balance for 1997-98 and 
therefore sustained price ral- 
lies were unlikely. 

Billiton was predicting a 
supply deficit of 85,000 
tonnes this year and a sup- 
ply surplus of 85,000 tonnes 
in 1998. The LME cash price 
was forecast to average 
$1,650 a tonne in both years, 
compared with an average of 
$1,500 in 1996. 

Copper was heading for a 
supply surplus of 206,000 
tonnes this year and one of 
310,000 tonnes in 1998 as new 
production capacity came on 
stream, said Isabel Marshall, 
vice-president of strategic 
management and research, 
Codelco, the state-owned 
Chilean copper producer. 

“We foresee a manageable, 
medium-term downturn in 
the copper market which 
should reverse in a few years 
as demand catches up with 
the increase in supply,” she 

Copper prices, which aver- 
aged about $2,292 a tonne 
last year, might be higher in 
1997 because of good levels 
of consumption in the first 
seven months. Next year, 
however, the price was 
likely to be $2,094. 

- Daniel Smith, senior met- 
als analyst at Metal Bulletin 
Research, suggested the lead 
market was likely to be close 
to supply balance this year 
before moving into surplus 
in 1998. 

MBR forecast that cash 
LME prices would hold at 
present levels for the rest of 
this year to give an average 
of $650 a tonne for 1997, fall- 
ing to an average of $600 
next year. 

Nickel prices were set to 
rise next year, said Doug 
Upton, head of commodity 
research at HSBC James 

He forecast nickel prices 
would average $3 JO a pound 
($7,273 a tonne) this year and 
rise to $3.40 ($7,494) in 1998 
on the back of rising 

Mr Upton suggested there 
would be a 17,000 tonnes def- 
icit of nickel supply this 
year, felling to a deficit of 
3,000 tonnes in 1998. There 
would be a 26,000 tonnes sur- 
plus in 1999. 

Ron Bedder, managing 
director of the International 
Tin Research Institute, 
suggested the $200 a tonne 
rise in the tin price in the 
past 10 days to about $5,750 
was almost certainly “the 
beginlng of a bull run on tin 
that has an awful lot of sta- 
mina.” A run up to $6,500 a 
tonne seemed probably mid 
one to $7,000 quite possible. 

Helen W illiams on, analyst 
at Brandeis (Brokers), fore- 
cast that zinc prices were 
likely to reach a peak and 
average $1,380 a tonne next 
year before the market eased 
as new mining and sm elHng 
capacity was brought into 
production. Prices should 
then fall back to $1,300 a 

The western world zinc 
market would show a supply 
deficit of 263,000 tonnes this 
year and one of 110,000 
tonnes in 1998. 

The London Metal Bxch»ng» 
is ready to make big changes 
to stop any further fell in 
the number of its ring deal- 
ing members, David Ring 
the exchange's chief execu- 
tive, said yesterday. Nearly 
every non-ferrous metal con- 
tract signed the world over 
makes reference to the 
prices set by LME ring deal- 
ers in their daily “open out- 
cry” trading sessions. 

However, the number of 
ring dealers has halved to 15 
since 1980 as more organisa- 
tions have opted irjstoad to 
become associate members. 

Keith Gaunt, managing 
director of Amalgamated 
Metal Trading, one of the 
remaining ring dealing mem- 
bers, drew attention to the 
situation yesterday in a pre- 
! sentation at a meeting 
organised by the publication 
| American Metal Market He 
pointed out that ring mem- 
bership cost about £lm a 
year more than being an 
associate because highly 
trained and costly floor 
teams had to be provided. 

He warned: “If ring deal- 
ing membership drops to a 
level that threatens the cred- 
ibility Of LMR pricing, then 
few users of the market will 
benefit and trade will be 
forced into opaque and unre- 



t.mb ring membership costs about £lm a year more than, bring an associate 

gulated pricing with all the 
attendant risks." 

He insisted: “The LME 
must change its pricing or 
structure to encourage and, 
if necessary, require major 
associate members to join 
the exchange proper, and I 
urge the LME to respond 
urgently to this clear need." 

Mr King responded by say- 

ing that the LME had 
attempted to halt the exodus 
by making modest cha nges, 
such as “juggling" its fees in 
favour of ring members. 
More fundamental changes 
were required, however, and 
the LME was looking at 
what these should involve 
and how they might be 

Mr King also revealed that 
the LME board would make 
more information available 
when it was forced to inter- 
vene in one of its markets. 
At present, the LME has put 
limits on four of the seven 
metals it trades. 

Mr Gaunt claimed: “The 
current system of interven- 
tion is entirely unsatisfac- 

tory. in that there seems 
little consistency as to if and 
when the LME' should inter- 
vene eras to the level [ctf the 
intervention]. The LME 
always refuses any explana- 
tion which, understandably, 
results in it being much 
maligned.” - 

Mr King said the exchange 
attempted to use uniform 
intervention. procedures, but 
fwnh market squeeze was dif- 
ferent and required different 
measures to combat it. 

He promised, however, 
that the LME would give 
more information about how ' 
flgp jqinrw to intervene, were 
reached anf i the steps that 
had been taken to avoid con- 
flicts of interest. 

Mr Qawnt also complained 
that the cost of regulating 
the IMS was rising at an 
unsustainable rate. 

He suggested that since 
1987, the first year of tbe 
new regulatory regime, tbe 
operating costs of the LME 
had risen by 350 per cent in 
real terms. After allowance 
for the increase in clearing 
membership, this equated to 
a five-fold rise in direct regu- 
latory costs for each 

“Based on an analysis of 
thwa costs within my own 
company, I calculate that 
these bidden extras amount 
to $l&5m a year for the ring 
dealing membership alone." 

crop seen 
for Brazil 

By ASson Maitland 

Coffee prices are l&e]? to 
fall next year as Bnz% the 
world’s largest pr oducer, 

. looks forward to a bumper 
crop of at least 35m BOkg 
bags, an international coffee 
conference heard yesterilay. 

Kerry Muir, an. in depea - 

dent economist and consul - 
tant, he- would be nr* 
prised if Brazil's 1998-89 
crop was “significantly less” : 
than 36m bags. That- fete' 
higher than estimates of 
Mm- asm bags for the; cur- - 
rent crop and would be 
enough to give the country a 
trading surplus of fint-8m 

Profit-taking erases gains in crude oil 


By Robert Conrfne, Nikki 
Taft, Kenneth Goocfing 
and AEson Maitland 

Crude oil prices tumbled 
yesterday after profit-taking 
erased gains made last Fri- 
day, when a combination of 
terhninal factors and rising 
tension in the Gulf provided 
fresh impetus to a rally that 
has lifted oil prices by a fifth 
since mid-September. 

The price of Brent Blend 
for November delivery, the 
international bellwether, 
rose to an intra-day high of 
$21.75 a barrel before falling 

by as much as $1-11 at one 
stage In trading on London’s 
International Petroleum 
ffrfhflnge- Brent later recov- 
ered somewhat but in late 
trading it was still 69 cents 
down on Friday's close of 
$21.61 a barrel. 

Speculative buying by 
hedge funds had helped fuel 
the recent rally, which saw 
oil prices reach an eight- 
month high. T ensions in the 
Gulf following an Iranian air 
force incursion into the 
western-enforced no-fly zone 
over Iraq had helped to 
underpin the rally. 

On the New York Mercan- 
tile Exchange crude oil 

futures showed sharp 
declines in the morning as 
profit-takers moved in. 

The November crude oil 
contract on Nymex had lost 
69 emits at $22.07 by midday, 
recovering slightly from a 
low of S2L65 at one point 
The December, January and 
February contracts were also 
down by around 50 cents. 
Heating oil contracts also 
eased back, with the Novem- 
ber futures losing 156 points, 
at 60.45 cents. 

On the London Metal 
Exchange the price of zinc 
for immediate delivery 
dropped by 3.1 per cent to 
close at $1,295 a tonne and 

three-month tine was down 
by 29 per <*»nt to $1*309. 

Lead prices also fell 
sharply after losing more 
than 6 per cent of their value 
last week. Yesterday, three- 
month lead was down by 29 
per cent at $610 a tonne. 

Copper was the only metal 
to Tnaifg a significant pm, 
rising by 1.6 per cent to 
$2,110 a tonne for three- 
month metal 

Buying in New York 
helped coffee futures on 
TJffp to close Tii ghpr in an 
active end to a quiet day. 
The robusta contract for 
January delivery closed up 
$7 at $1980 a tonne. 

In New York. March arab- 
ica was 5.45 cents higher at 
155.95 cents a pound In after- 
noon trading. 

The lack of activity on 
LiSe was attributed to the 
absence of traders attending 
F.O. Licbfs world coffee con- 
ference in London. 

Wait for news on the Ivory 
Coast crop held back T.ifre 
trading in cocoa. The March 
contract closed just £1 
highpr at £1,158 in thin trad- 
ing. Some 15,000 tonnes of 
cocoa were reported 
destroyed in Friday’s fire at 
an Amsterdam, -which trad- 
ers said was too small an 
amount to drive the market . 

“Preliminary indications 
are that production fo r the 
rest of the world, wifi . also 
provide some surplus, paa> 
ticnlarly of robusta,” Mr; : 
Muir told F.O. Lichfs world 
coffee conference in London. 

“With consumption 
1997 dampened as a result of ■ 
the price surge in -tbe first 
half of this year, we ctmH 
expect that prices!, in' -1998 

would be weak - ^at prices 


He said the . bumper har- 
vest would be baised; on. 
favourable weather And 
trees -planted in -the 1980s- 
reac h ing fall bearing ages-- .. 

Predictions about demand ; 
and supply -are of particular 
interest after the sharp; 
gains in coffee prices In the ' 
first six months of this year, . 
more than half of which 
have been lost since the , 
June market peak. '' 

Mr Muir said ^ .“bodniL 
and. bust” eyries that had 
bedevilled the coffee market 
might be leas pnmoiniced -as 
farmers increased produce 
tton less, vigorously in - 
response to juice rises. . 

Investment -in new and : 
renovated trees was limited: 
by the lower f ertOity of new 
cropping land and. the: 
“demoralised” state of exist- 
ing farmers, who were more 
likely to concentrate on 
maintaining current output 



Precious Metals continued GRAINS AND OIL SEEDS SOFTS 


(Prices from Amalgamated Motal TratflngJ 
■ ALUMINIUM, 98.7 PURTTY (S par tonne) 


3 rath* 










AM Official 



Kerb doss 


Open frit 


Total dafly tumovef 


■ ALUMNIUM ALLOY (S per tonnrt 









AM Official 



Kerb dose 


Open bit 


Total dafly tumo+er 


■ LEAD (S per tonne) 









AM Official 



Karb dose 


Open tot 


Total daBy turnover 


■ NICKEL (S par tonne) 









AM Official 



Kerb dose 


Open tnL 


Total daily turnover 


■ TIN ($ per torm) 









AM Offldri 



Kerb dose 


Open kit 


Total daly turnover 


■ ZINC, apedat Wgh grade (S per tonne) 









AM Official 



■ GOLD COMEX (100 Tftoy ol; Sftroy CL) 

Sea Day's Open 

pries daaga Mflh km to fat 

Oct 3323 -23 3343 333.0 21 166 

■w 333.1 -23 - - I - 

Dm 3343 -23 3385 3341 38,520 97,245 

Mi 3353 -23 337.7 3353 580 21.782 

Apr 3373 -2 A 33&4 3372 593 5310 

JOB 338.4 -2 A 342.1 3347 196 9£17 

TOW 38,144183^18 

■ PLATINUM NYMEX (50 Troy Ox^ S/lroy ozj 

, WHEAT UFFE (lOOtamaa; £ per toroel 

■ COCOA UFFE (10 tomes; EAorra) 


■ LIVE CATTLE CME (40.0008*1; cartfr/taeS 


4232 -48 4245 421.5 

4232 -43 4250 421-5 1255 12286 

Apr 415J -4.3 4163 4155 8 809 

& 411.7 -43 418.0 41BJD 1 3 

TolN 1382 13.7S4 

■ PALLADIUM NYMEX (100 Troy oz^ S/Iroy az.) 

Dse 194.75 +135 19550 19375 323 3341 

Mar 190.75 +135 - 338 

Jan 19025 +135 - - 1 109 

TOM 323 33» 

■ SILVER COMEX (5300 Tref ol; Certtftwy <aj 

Oct 516.7 -05 517-5 5173 8 5 

■as 5183 -9.8 - - 1 - 

Dm 520.7 -06 531.0 5100 14,949 73,979 

J» 522.1 -93 5213 5213 17,159 22 

Iter 527.0 -917 5335 5250 2354 17330 

Hay 5303 -9.7 538.0 529.0 380 3371 

Total 38358103988 








Srit Oaf* 



cfaMfo ffi & Law 

to u 

price cfaritge Hgfa 


VU lot 

Price change Hgfr Low Vri 


« 9* 


+0.45 8755 8725 

206 2549 




1134 1560 47.665 


61400 - 66500 65550 3500 




+035 8065 8025 

124 2525 






334 5Z304 


66575+0.100 66575 61275 6,154 




+035 91.60 9125 

368 2513 






87 23551 


69.725+0575 69550 69.400 2JS3 




+035 9360 9325 

60 1773 






70 9.017 


72.625-1150 72575 72550 691 




+035 9550 9550 

- 141 






113 13,701 


69575-1175 0525 6920 396 



795 10501 






69 15522 


69.150 - 61400 0500 142 


■ WHEAT car 6,00Gbu mm; centsffiOb tanhel) 








-250 35050 35100 12,752 65569 

■ COCOA CSCE (10 tonnes; SAonrwa) 

■ LEAN HOGS CME (40500to« esnta/toe) 



-150 37250 38650 

3595 26.103 





1680 3528 44.176 


68575+1225 61700 61250 2551 




-100 37050 374.75 

996 5264 





1711 1555 24547 


63500-1475 61600 6Z725 2907 




-ZOO 38050 377.00 

906 11,499 






376 12160 


62650+0.050 62750 62000 7S2 




+2JD0 88000 386J0Q 

34 63 






294 35Z7 


59575+0.125 59550 99500 162 




-150 38100 39150 

201 2534 






297 4532 


65.175-1325 65800 65100 90 



1UM 710557 






415 B5« 


61925-1400 64.400 61325 23 


■ MAIZE C8T p.000 bu min; cents/56to buriiaQ 






267.75 +3.00 26075 261.75 29328201.745 
27050 +330 277-50 27130 5,834 6S37B 
28225 +325 28275 27050 1.128 17,157 
28050 +400 287.00 28030 2339 29370 
27075 +325 27000 27375 45 2.156 

Z77.75 +330 27000 27200 1.461 18.198 
70535 334172 

■ COCOA (ECO) (SEW 8/tonne} 

■ PORK BELLIES CME (40,000fcs; centartbd 

■ BARLEY UFFE HOP tonnes: C per tonne) 

8125 +0.15 8120 8120 
8350 +025 8375 8370 
8030 +025 
8700 +035 

25 1,105 
46 867 

- 340 



■ CRUDE OIL NYMEX (1500 barrets. S/barreO 

TOM 71 2341 

■ SOYABEANS C8T|5300to Ota; CMtsWe MM 

Oct 3 Ptiea Prs*. day 

Daly 1288.34 128824 

n copg UFFE (5 tarmaK SAonrre) 

Ns* 1659 +5 I860 1633 1,084 15278 

Jan 1678 +0 1880 1652 1246 11,958 

Mar 1684 +6 1685 1857 Z79 5,7l8 

Hay 1693 +5 1887 1670 173 1.236 

to 1703 +5 - - - 302 

Sep 1708 +5 - - - 197 

Total 2382 3478B 

■ COFFEE ■C 1 CSCE p7.5001ba: cents/lbs} 

M» 62275-1.000 64350 62400 1,368 5264 

Kir 62275-1225 64.000 62350 48 615 

Hay 64200 -0200 64950 64400 10 12B 

to 65300-0350 66200 68300 16 95 

Aag 64300 - 64900 63875 2 12 

Total 1,425 6.733 


Strflea price S tonne — Cols — — Puts — 

Utat Day's Open 

pries cftHips lip Isa H U 

I* 2236 -0.70 2303 3125 86316 I OS 

K 2138 -057 222S 2120 60336 84,177 

in 21.77 -053 2255 3150 18,153 42375 

fa 2155 -051 2225 21.40 9305 24457 

w 21.35 -0.49 2139 2130 5313 13.149 

r 21.10 - 21.74 21.10 379211231 

tel 19*318436208 

CRUDE OIL 1PE (S/ts*rel) 

64750 +8.00 652.00 63820 48248100207 
64935 +7J5 86420 63850 11381 31270 
65650 +025 66000 64450 4371 15,451 
862.75 +850 68520 65150 1211 1332B 
56835 +7.75 57120 65850 3563 11,987 
66850 +1250 67020 65850 19 370 

71,107 177218 



+100 17150 16350 3334 12564 



+545 15650 15150 





+455 ISOM 1 4655 





+4.10 1425D 14150 





+3.60 13850 13850 





+3.75 13100 131.00 




V® 24^56 

■ SOYABEAN 04L CUT (BaOOOIba: cents/lb) 

Kerb dose 

Open frit 80,630 

Total dally turnover 34.381 

H COPPER, gracte A (S per tonne) 










AM Official 



Kerb ctaae 


Open W. 


Total daiy tunovar 


■ LME AM OfBdaJ fV* iwtec 151S2 

latest Day's Opm 

pries efaangs HU In W M 

is* 2024 -0.77 217$ 2050 19292 61.300 

Dae 20.76 -0.64 2122 20.45 14,784 47,417 

J to 2024 -057 21.42 20.37 5.783 29257 

Fab 20A5 -053 2130 2030 2,130 12546 

Hit 2030 -055 209$ 2000 1,423 4289 

Apr 1920 -023 2022 2030 345 ZJT9 

Total 44227172431 

■ HEATING OS. NYMEX (42200 US gate; CAE gab] 

OH 2401 +0.16 2424 23.76 1302 3,141 

Use 2454 +021 2456 2421 10093 54222 

Jan 2450 +025 3475 2438 3280 18,014 

Hn 2477 +028 2486 2450 1418 10.175 

■ay 24.81 +023 2550 2455 920 7516 

to 2488 +022 2500 24.72 820 6,695 

Tbtal 10270 101,411 

■ SOYABEAN MEAL CUT (100 tans: S/ton) 

■ COFFEE (ICO) (US oenta/pomd) 

OctS Prev: day 

Comp, any 128.83 126.75 

15 «jy average 127.41 127.70 

■ WHTTE SUGAR UFFE (50 tames: Stonne) 
Dec 3035 +09 3M5 3013 519 10370 

LME Closing OS rats: 1.6125 

Spot 15139 3 MS 15078 BlflK 15308 9 rate 15846 

Latest Day** 
pries change Sp In N U 

Ha* 6025 -1.76 6250 5950 21,122 51337 

Dm 61.15 -155 6355 6050 16360 31501 

Jm 61.70 -1.45 63.75 6130 5,742 21577 

Mi 61.65 -150 63.10 6130 2331 12322 

liar 6055 -150 6230 6030 1360 8.489 

Apr 5950 -0.40 5930 5630 183 4397 

Total 47371146523 

■ GAS Qg-IPE gnome) 

Sett Day's Open 

pries cfasoga Bgfa lorn W U 

Oct 18530 -335 19130 18335 8.480 18338 
Iter 18850 -230 19250 18530 12511 28383 
Dm 18830 -235 19430 18635 3337 17380 
Jm 18925 -230 19530 18735 3,168 14,732 
Mi 18930 -235 19450 18875 1345 7530 
Iter 186.00 -200 10130 190.00 28G 5364 

Tntri 38885102*13 

■ NATURAL GAS PE (1J00 Bams; pro pm ■—) 

■a* 12950 -0320 12350 12500 50 1320 

Dr 15330 - 15300 15300 25 1210 

Total 130 11575 

■ NATURAL QAS TWBt (10300 aanfifrL; StareflbiJ 

Uteri Day* 0 pm 

Price driop Wgh La* Vai tat 
Do* 3350 -0375 3.1 2D 3.030 18350 53345 

Itee 3.140 -0084 3200 1120 5.488 32757 

Jm 3385 -0368 2160 3370 4496 Z7.17T 

rm 27® -0.052 2300 2240 1339 144 2D 

■ar 2535 -0.035 2570 2330 678 12576 

Ate 2525-0330 23® 232D 443 8335 





price drags 























4596 21*32 



















94 A0 




4773 stAtr 


(Prices suppfed by N M Roth3Chikfl 

Qo*d(Troy ozj S price E oqutv SFr equtv 

Ctosa 33210-33230 

Opening 3343033430 

Morning fix 334.16 206L482 483548 

Afternoon Ibc 33250 205.717 482790 

Day's Hgft 334^533475 

Day’s Low 33210-33230 

Previous doss 33320-33330 

Loco Ldn Mea n Gold Landng Rata* (Vs USS) 






4.431 11,923 





2011 11,741 41106 





*,«* 17557 






2553 11200 






1355 15,660 



•m n 




1,729 8513 
27,031 117398 

■ POTATOES UFFE (20 tonnes; £ per tonne) 


















34 1,009 












34 1538 

3033 +0,9 3043 301.0 519 10270 

3103 +0.4 3115 3095 775 13,757 

315.4 +65 3163 315.4 1® 3,194 

3175 -05 3192 3175 395 1,703 

3135 -03 3153 3133 152 2830 

3113 -32 - - - 124 

2306 313a 

(917%) LME 










1600 _ 





1700 „ 





(Grade A) LME 





2000 _ _ 








































1000 . 





1025 __ 















2000 . 





No.9,499 Set by ORENSE 

■ FREIGHT (BlFFBQ UFTE (SlO/Indax pofrs} 












































■ SUGAR 11* CSCE (112,000lb3: centa/to^ 

Bar 1131 -039 1132 11. 7612972 93,679 
Hay 11.82 -0.06 1139 1130 2847 22.717 

JN 1157 -036 11.73 11.67 2174 17,971 

Oct 11.63 -0.05 11.67 11.63 93 8 14/423 

Mar 1158 -0.02 1158 1158 287 3,099 

Hay 1153 -0.02 1150 1150 10 201 

Total 12208192140 

■ COTTOK NYCE (50.0C0tos; oenteAbsi 

Oet 68.60 -0.78 69 49 6830 13 28 

Dm 7132 -032 7134 7T30 3536 48352 

■nr 7251 -0.66 7120 7250 815 15375 

May 7137 -0.43 7333 7135 602 7.B82 

to 7438 -0.43 7444 7407 247 6.701 

Oet 7437 -023 76.00 7430 11 718 

Tom 5356 83,1*4 

■ ORANQE JUICE NYCE (15300fas; cents/lbs) 




■ CRUDE OIL FOB (pa- barrel) +or- 

Dubai SlB.60-9.7Dw -0525 

Brent Biend (dried) S21 .10-1.12 -0.350 

Brent Stand (Nov) S2U0O-1J02 -0500 

W.TJ. S2224-230W -0405 

■ OH. PRODUCTS HM E gn mi n dateeiy CF (bme) 

Premium Gaecdne 
Gas OH 
Heavy Fuel OH 

Mm 3 1 II 1 1 

Jet bto 

5208-21 Q 


■ PULPEX OMX ($8; 24 air dry tons) 
Srit Bay's 

7455 +0.05 7430 73.80 2328 17.742 

7750 +030 77.60 76.70 1324 10324 

80.45 +4L40 8050 7160 561 7,126 

8330 +0.40 8350 8250 18 1,723 

8635 +050 8535 8535 21 734 

8735 +050 - - - 274 

4A94 38J30B 

■ NATURAL GAS Pencefthenn) 

price daaga Hgfr Low 





-250 60350 60030 





-450 621.00 61950 






1 month — 

2 mo n th s — 

3 months 

_532 6 months 279 

234 12 mo n ths 299 


Star Rx 


3 months 

8 months 

1 year 

p/troy ox. 

US cts equtv. 




Grid Cotas 

S price 

£ aquiv. 






Maple Leal 




New Sovereign 






Uteri Day’s 

Price efaMM Hrii law 

Vsi tat 
18350 53345 
5.488 32757 
4486 Z7.171 
1539 18428 
6 78 12576 
443 8335 
Sf 5*8 231,857 


Open Interest and Vofajne data shown tor 
oantrects traded on COMEX NYMEX CETT. 
NYCE. CME. C9CE and PE Crude Oil as 
one day In arrears. Volume 8 Open Interest 
tetris era tar afl traded months. 


AH Ultima data suppled by CMS. 

«^rs opm 

Price ckanga Low Vri tat 

61.75 -134 6350 6130 18338 42974 
61.® -133 6110 81® 8343 14388 

- 6235 8130 1,027 4,782 

3S 6330 61.75 844 5391 

- 6530 8530 775 3JBS 

23354 94583 

There was good demand tor landed tea, 
the Tea Brokers' Association reports. 
Asaams sold woe. especially cotoury 
medwn8 which tended deerv while rihem 
were about 1km. East Africans mat good 
competition at ftm to dearer l e v el s, partic- 
ularly cotoury liquoring types. Offshore 
there was afrimg demand at around last 
rates. Quotations tar this safe: Landed: 
best available i66p; good IBOp; good 
medkan 154p; merium 140p: low medum 
ilOp (nom). The Hgbest price reaflssd this 
werit was 166p far ai Assam PD. 


H nunfora (Bases 1648/31 = 100) 

Oet 6 Oct 3 month ago year ago 
18S0.3 1883.7 19443 18903 

■ CRB Ftatuma (Base: 19S7 = 100) 

Oct 3 Oct 2 month ago yew ago 
246.18 243 AO - - 

■ osa Spot (Base: 1970 - 100) 

Oct 3 Oct 2 

month ago 

year ago 

20754 20351 









Munfavum dtoy 



















4+0.90 0 





Barton (Nov) 1255-13.00 -0.025 

Ariratean Aipo. Tel Lanotai W7t) 3 SB 87 82 

Gold (per trey oa)* 



Shier (per boy ojjl 

322 JOc 


Ptatirejm (per troy cm) 



PaJtedfran (per troy 





Lead (US prod.) 


Tin (Kuala Lianpw) 


Tin (New Yota 


Cattle (Dve weight) 



Sheep (Sve weight} 


-3.1 CT 

Pigs (Sve wetgytQt 



Lon. day eu gar (raw) 



Lon. day sugs (wte) 



Barley (&ig. feed) 


Maize (US No3 Yetow) 


Wheat (US Dale North] 


Rubber (Deft? 




Rubber (KLRSSNol) 



Coconut 08 (PW)§ 



Pafrn Ol (Mriay.)§ 



Copra (Phfl)§ 

541 55z 

Soyabeans (US) 



Ctwcn OutkxUCA' Mat 


Woofaope (B4e Stow) 



1 Hydro-electricity genera- 
tion in California (6.5) 

7 Half tbe season's total (3) 

9 Nrar to cbHapse an a battle- 
field (5) 

10 Will men at work follow 
the matrh? (0) 

11 Go into detail, hardly able 
to speak. (9) 

12 Angry terrorists get timers 

ana explosives for starters 

(5) . 

13 Pass oyer the Spanish offi- 
cer (7) 

IS HU in holidays at Easter- 
time (4) ■ 

18 Chief sources of electro- 
magnetic isotopes revealed 

20 Selects another hgi n fri p (7) 

23 Article some set adders) 

24 Multi-functional plaque 
drug nearly developed (9) 

26 Time to study factory rou- 
tine (9) 

27 Par first seven - capital! (5) 

28 Express disappointment -jn 
En glish after game (3) . 

29 He rambles on while out at 
night Ol) 

S PJfteww rtrertWnmB »mkL p jwwrtg. c cwrefc 

'• DOWN- ; . v;' 

1 Dance for love in the raiikS r 

. <6) •• r-v-.v.;,;'! 

2 They arc worn out at work' ' 

• ^ *■ 'V ' f ' : ' 

. 3 Tune to find inspiration for . l - - 
lyrics. (S) “ *: . . • 

4 Decline to follow — end up ; 

in danger (7) - •••:/.-* '-v'; 

5 Rings last of new shiare 
deates tin Sunday , (7) 

6 A good imitation trails 
^ Kmlptme (9) 

. 7 The nse and fell of the Vagv i. i ' 
ican painful to. hear cf (9 •' 

8 Mother has time for bust--* - - 
.• ness (6) : r w V v 

14 Made notes about worms -•A’’ ' 

(?) •• it-*-'- -r" 

18 Sleeping bag? (8) 

17 One judges fools ^thna -^ > ” -- 
s - fight (8). - - - • ‘ r ri = -tt; 

19 Need singes, say, to follow: 

one?) :• uv 

2Q Seafood rifeh localB 8tet ;to »• <•> 
promote (7) -' --- 

21 Talk . about the 
rain on the window 

22 Bunch of i BQtririwf'g, 

■ . than EngHsb<6)- 75 '&>. 

25 Strange degree in dam* f&J}} ;■ 



£Si !■+• 

Til •' 



f wt9g*g. m Wqtin (Dong , svOtt zOeWw. w 
MM U ata i Trii) j* if S C3F RcoeiUsfli. 9 Uoi ireM ' 

ctam. Qmge on tBw*d on 2352 Iwai of fto» 

sSStiHI! SSS 5 *? Wize puzzle on ^ ‘ 

Solution to yesterday s prize puzzle on Monday -I 


ssiiassssi giggfiigiigi 




Equities take a breather after recent records 


PTSE aikSh 


By Steve Thompson, 

UK Stock Market Editor 

The London equity market's 
drive to new peaks ran into the 
buffers yesterday on a mixture of 

The principal downside factor 
was said to have been an influen- 
tial survey highlighting the Brit- 
ish public’s hostility to European 
monetary union, which upset 

The latter have been moving 
sharply higher since an authori- 
tative report said the government 
had wanned to European mone- 
tary union. Adding to the stock 

market’s discomfort early yester- 
day was Wall Street's rather dis- 
appointing closing performance 
last Friday. 

The Dow Jones Industrial 
Average had finished only 12 
points up on the day, after post- 
ing a three-figure rise during 
early trading. The September 
non-farm payroll report showed a 
small er-than -expect ed increase in 
job creation. 

Finally, a burst of good old- 
fashioned profit-taking took 
share prices lower. Dealers were 
unsurprised at the flumes of 
profit-taking, pointing out that 
the FTSE 100 index had risen 488 
points, about 10 per cent, since 
the middle of last month. 

But London closed well above 
the session's lows, responding to 
a fresh burst of strength on Wall 
Street yesterday. The Dow 
pushed up more than 60 points in 
quick time, before easing off its 
best as London closed. 

Footsie settled 30.8 lower at 
exactly 5^00. substantially above 
its session low of 5.268-0. reached 
an hour after the market opened 
when the Emu and profit-taking 
stories were at their height. 

But losses in the other FTSE 
indices were m uch more modest, 
with the FTSE 250 index slipping 
16-5 to 4,867.4, against a session 
low of 43663. and the FTSE All- 
Share index 12J.6 off at 2,48035. 

There was good news for inves- 

tors In smaller stocks, which 
have underperformed the FTSE 
100 and 250 indices for over 15 
months. The SmallCap index 
actually made good progress, 
posting a 4.0 gain at 23643, a 
fraction off the day's best and 
only 9.4 off its closing record, 
reached on March 12. 

Dealers said the shake-out in 
UK stocks was not seen as the 
start of a long-term correction by 
the marirpt- “We were due a dose 
of profit-taking and we’ve had it.” 
said one marketmaker glad to 
have been able to replenish a 
depleted trading book. Turnover 
in equities was 673m shares, with 
non-FTSE 100 stocks accounting 
for 55 per cent 

There is plenty of news to 
occupy the market for the rest of 

the week, the most important of 
which is the domestic inflation 
report for September, due this 
morning. Hie data are expected 
to show headline inflation of 
about 3.4 per cent higher on the 
year wnd core inflation running 
at 23 per cent 

Ladbroke, the hotels-to-gaming 
group, vied all day for top spot in 
the Footsie performance table, 
event uall y settling for second 
place as the market noted 
prospects for the sale of one of its 
L ondon hotel* and the current 
series of presentations by 
senior management to US 


aatwi ■' t 

Indices and ratios 

FTSE 1 00 . . 5300.0. -30.8 

FTSE 250 4867.4 -163 

FTSE 350 2541.7 • -13.6 

FTSE AB-Share 248035 -12.16 

FTSE AB-Share yteld 3.14 3.13 

Best performing s e ctors 

1 Household Goods .*1.8' 

2 Alcoholic Beverages +0.8 

3 Property +0-3 

4 Pharniacouticate — -+CL3 

5 Leisure & Hotels — +03 

FT 30 33873 • >Mi 

FTSE Non-Fins p/e 20.74 . '2031 

FTSEIOOFut Dbg 5371 .D ./ -253 

lOyrGBtyteW 638 628 

Long gttfequtty yfc! ratio 234 - 234. 

Worst performing sectors - 

1 Banks; fletafl —--1.6 

2 Teleco mm unications — -13 

3 Extractive Industries 

4 Electronic & Seta Equip — -T.1 

5 Utilities »• -1-1 

Arbs and 
hit BT 

By Joed Kibazo, Peter John 
and Martin Brice 

Shares in British 
Telecommunications fal- 
tered as arbitrageurs bailed 
out of the stock on reports 
that the group planned to 
fight a counter-bid for its 
merger partner MCI Commu- 
nications by under mining its 

The UK group was later 
said to have denied specula- 
tion that it planned to 
mount a campaign to under- 
mine WorldCom of the US, 
which last week topped BT*s 
own bid for MCL 

The shares fell li to 
45SVap, with 37m having 
been dealt by the close to 
make it the most actively 
traded Footsie stock of the 

Sentiment was further hit 
by a change of recommenda- 
tion by a leading broker. 
Deutsche Morgan Grenfell 
yesterday lowered its recom- 
mendation from “over- 
weight” to “neutral” as a 
direct result of WorldCom’s 
bid for MCL 

The broker said: “Much of 
the growth we had previ- 
ously forecast for the years 
1999 to 2001 was to come 
from the improvement in 
MCI businesses. Without the 
MCI acquisition, we forecast 
the annual earnings per 
share growth would revert 
to 5 per cent (or 6 per cent in 

the event of a major share 

The broker added: “Earn- 
ings per share without MCI 
will thus be higher in 1998 
but lower in subsequent 

Options in the stock were 
also heavily dealt, with the 
equivalent of 4.6m shares 

The discomfort at Barclays 
continued as the market fret- 
ted over the intended 
break-up of BZW. the bank's 
investment arm 

The shares were down 50 
at one stage and still ended 
the day I7y> off at £16.80. 
compounding a fall of 50p on 
Friday. There are fears that 
Friday’s announcement 
might prompt a staff stam- 

However, banking analysts 
pointed out that the stock 
had been one of the market's 
strongest performers in 
recent months, rising 36 per 
cent in the third quarter. 

Also, Barclays revealed 
that it was offering staff a 
guarantee of at least 110 per 
cent of last year's bonus if 
they stay until a sale is com- 

Talk in the market that 
ML Holdings was in line for 
a bid approach, probably 
from a European electronic 
components distributor, 
prompted an advance in its 
shares, which swam against 
the tide of a generally declin- 
ing engineering sector. 

Shares in the company, 
which recently sold its 
defence businesses to Cob- 
ham for £35m. gained 3% to 
57p. Traders said the story 
was sparked by talk of the 
sale of 3 per cent of the com- 
pany on Friday, when total 

volume in the shares was 
about 10m. Yesterday about 
500.000 shares changed 
hands, brisk for ML Hold- 
ings, which has a market 
capitalisation of about£9Qm. 

One trader said: “This 
company has £35m in rash , 
the sector is consolidating 
and the shares are at their 
highest for years. All the 
signs axe there." 

However, Derek Crook, 
chief executive of the com- 
pany, said yesterday: “There 
is no sign of anybody mak- 
ing a bid and I would be 
surprised if there was one." 

Selective Lloyd’s Insur- 
ance funds stood out as 
investors reacted to a shift of 
stance from UBS. 

The broker, which had 
been cautions on the sub- 
sector. turned positive argu- 
ing that concerns were now 
“over discounted” and “cor- 
porate activity may acceler- 
ate recognition of value". 

UBS focused Its “strong 
buy" recommendations on 
Angeistein. which rose 2‘A 
to 107p. Finsbury, which 
rose 2 to 13QP< Limit, firm at 
128p, and KHn. steady at 99p. 

Hotels and leisure giant 
Ladbroke was in demand. 
The shares advanced 5 Vi to 
283’Ap. one of the b est per- 
formers in the FTSE 100. 

The company is currently 
holding presentations for 
Investors in the US. Dealers 
said the improving perfor- 
mance of the company’s Hil- 
ton hotels in several of its 
markets, including Europe, 
was a particular feature of 
the presentation which 
helped boost sentiment 
Others pointed to the 
spate of upgradings in earn- 
ings estimates as another 
reason for the improved 
view of the company. 

Oil stocks outperformed 
the weak market as the 
underlying crude price con- 


Oct 6 

Oct 3 Oct 2 Oct 1 Sep 30 Yr ago 'High low 

FT 30 33373 3407.3 3379.8 3395.1 3370.5 2848.4 3407.3 26668 

Ord. div. yield 332 131 3.34 383 335 3.97 <22 3 31 

FVE ratio net 22.18 22.18 22.00 22.11 21.96 17.39 22.18 1680 

P/E ratio nl 21.87 21.88 21.70 21 SI 2166 1723 21-88 15.71 

FT 30 anse axrpia tfcw ngh 3407.3 03/1097; low 4 9/4 2MEM0. Baja Dm 1/7/35. 

FT 30 hourty changM 

Open 100 moo 11,00 1 ZOO 13. 60 MW 1SL00 16L00 Htgti Low 

3397.0 3386.1 33725 3374.1 3380.4 3380.0 3387.6 3391.6 33938 3387 JJ 337X0 
Oct 6 Oct 3 002 Oct 1 Sep 30 Yr ago 

SEAQ bargains 5X266 58.108 81.317 62.789 53,104 49.159 

Equity turnover (Emjt - 32412 38012 3267.8 3179.8 14114 

Equity bargainst - 55.988 61.781 63.879 48.775 42,829 

Shares Traded (mm - 932J2 966.8 B&0.5 9002 4812 

t&ndurtng xxra-aiartet «l overseen turnover but Mudng Crest twnovw. 
o FR5E rr a i umm imm iaor. M> ngnts revived. ‘For iW7. 

■ London market data 

fibn and taBs* 

1 52 Week highs and knmj 

UFFE Equity options 

Total Rteea 

766 i 

Total HBghs 


Total contracts 

Total Fats 


Total Lows 






Oct 6 *Deta based an Equity sheas fisted on the London Store Service. 


financial aM 


news from 

European & Asian 


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UK, European and Asian markets, 
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you know AFX NEWS will always be 
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and in other key markets feeding over 
1500 news stories a day direct to your 
system. So, for independent and 
succinct reporting on economic, 
corporate and market news, contact 
AFX NEWS direct or your local 
vendor today. 



AFX NEWS 1S-17 EPWORTH STREET, LONDON EC2A 4DL (44) 171 253 2532 
FAX (44) 171 490 3007 EMAIL: AFX-SALES©FT.COM AND NEW YORK. USA (212) 306 6734 

tinned to strengthen on con- 
cerns about tension in the 

Brent crude was up 
another 50 cents from last 
Friday's close. And BP 
bucked the trend to close 6 
up at 939p- Enterprise eased 
only 3 to 69T/.P and Lasmo 
shed only VA to 283 Vip. 

Reckitt & Column rose 23 
to 998p as NatWest Securi- 
ties pointed out the funda- 
mental value in the stock. 

Dealers said there had 
been an internal morning 
meeting desk note from the 
broker following a recent 
analysts' visit to the compa- 
ny’s US operations. 

NatWest said a weaker 
pound and the proposed abo- 
lition of advance corporation 
tax left the stock underval- 
ued by about 10 per cent. 

Shield Diagnostics jumped 
30 to 782'/*p as the market 
awaited reports from the US 
Food and Drug Administra- 
tion on the company's heart 
attack predictor. One analyst 
said the news had been 
expected last Friday and 
should be released soon. 

Ellis & Everard, the UK’s 
largest distributor of chemi- 
cals. improved 2 to 287p 
ahead of a visit by analysis 
to the company's operations 
in Middlesbrough. 

BAe advanced 22 to 
£17.5134 on hopes of farther 
consolidation in the Euro- 
pean defence industry. There 
was talk that it could bid for 
Siemens Plessey with Ger- 
many’s DASA. 

The property sector was 
one area of blue on the 
screens yesterday, helped by 
a note from Charterhouse 
Tflney that focused on the 
effect of a fall in gilt yields. 
The broker said: “We esti- 
mate that a 1 per cent 
decline would equate to an 
increase of 20 per cent in the 
NAV (net asset value) for 
the averagely geared prop- 
erty company." 

The note highlighted Der- 
went Valley, up 3’/, to 548‘Ap; 
Shaftesbury, firmer at 200p, 

and Grantch ester, which 
rose 7 to I55p. 

Burford Holdings 
advanced l l A to ll6p, helped 
by news that director Dun- 
can Moss had bought 18£00 
shares at I09p each. 

Savins firmed to L23V a p 
after announcing the expan- 
sion of its Manchester 
operations via an acquisi- 

Red! and shares brought 
farther grief for investors. 
falling TVs to 246Vip in brisk 
volume of 4.3m following 
weekend press advice that 
shareholders should take 

RMC, also exposed to the 
German market which hurt 
Redland in its recent results, 
was down in sympathy and 
shed 12% to 992’/jp. 



Sett prion Chance rtgh 

Low' Est voi Open tot- 


5371.0 -24 XJ 5388.0 

5331.0 8575 



5419.0 -34:0 




100 ooex OPTION (LDTe C5324 ) CIO pra WUndeoi point 


si 60 6200 5250 5300 5360 6400 5460. 8600 

03 219 2< 178b 32b 137b 48 193 64b 75 87 52 117b 38 1513 191 

Nor 288b 70b 25th 83 2»b 98 185b 119 155^1 39h 127 163b 1®182b 83 223- 

fee 341 95 302b108b26Bb 127 237b147b 299 169 05 IBZhlSlh 222 09 253 

Jan 371 117 334 131b*»b W 2* 171b M6 192 217 214b t* J42ht73b 272 - 

Jut <88 2Mb 4Z7 25Zb 36Sb 294 31* 348 

Cafe 11780 Pott 4075 • 


9175 6225 . 5275 3325 5375 5425 5475 6BB5 - 

Oct WZ 28b ISSb 40 119 55 «h ?<h 02 99 44 OO 29b 165 18b 204 
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Jnt 481b 215 419247b - Wh 284 38612324b 

CMS 10975 Ms 7,533 * IMariytag Us wtoa. ftwrfara Mm are band MsaMhnot 'prim. . 

1 law dates tap** twnOn. UbmAMa (ren aoremjre ftte aMoa. Oct 3 fete *M IBM 


issue Am Mte. Ctaae 

price paU cap 1997 price Net ON. Gks P/E 

p up ffmj High low Stodt p +A dfv. coy, yto net 

* KP. 461.2 180b 152b Aggndco 

- FJ>. 0.74 17b 16b tBucktefri for 

- TP. aQ8 12 BleucttndtawRM 10 

- TP. 439 3b 3b Caroburyh* ' 3b 

- FP. 1.12 1b b TCartxiyhvWMs lb 

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100 FP. 843 IK 109b fComputrtnd UK 140b 

§134 FP. 884 142b 134b flSSakifcws 142b 

IS FP. 175 17Bb 162b Latdiways 174b 

* FP. 2585 478b <50 Northern pock . 469b 

176b -2b W35 

-6b M1>15 

20 25287 

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15 215 
• -48 2 

-4 L3J5 25 24185 

l % Ptadng price. * fcnortudion. For * Ml epqftneOan ol at 

ahar symbols {Sene refer to Ibe London Stare Senrice noses. 


Oct Hetig 
3 ob day 

Oct Tara 

2 ago 

Gross ffv 
jieM % 



K-mfc . 
Hta> law 

Bold IGnes bafea (33) 

153326 404 

158420 1892E 



1968.11 1270.14 

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Pitta pS 

145632 -12 

149337 252209 



2534.01 122480 

tanhtii (5) 

154856 -29 

15B550 208088 



221880 133810 

Sortt America (ia 

156696 +18 

154247 168957 

086 ■■ 


183977 124433 

CaptnghL FTSE In r ama Uonal Unstu d 1997. AM egm reserved. Roues in tvactatx show 
number of entnpmm. Baafa US Dota*. Base Vriuec 100000 31AWBZ. f PertW- tateet prices 
were onavatebls for ihtz eOtkxL 

To Advert i s e 
Your Legal Notices 

1‘ I e a s c c o n tact 
Melanie Miles on 
Tel: t 4 4 017 1 S 7 3 3340 
Lax: + 4 4 0 1 71 8 7 3 3 0 6 4 

|| FTSE Actuaries Share indices 

r-'Z'j-j oeo carsrjnction \v;:h the Facti:^ arc : 

- c . 

of Acts 

The UK Series || 






WE Xd are. 


Oct 6 


ore 3 

Oct 2 


yte«% ytadtt 

ratio ytfl 


FTSE 100 









1176 12684 


FTSE 250 









2043 123.40 


FTSE 250 n IT 









1927 12787 


FTSE 850 




■XT*, n 




1988 8183 











1985 2984 


FTSE 350 Kghar VWd 









1152 7119 


FTSE 8S0 Lower YWd 









2387 47.16 











2486 5382 

FTSE SnstCap ex IT 









2106 5785 

2021 26 










20.14 59.78 


FTSE ABAare ex IT 









1177 2889 


■ FTSE Actuaries Industry Sectors 






WE Xd«* 


Ore 6 


ore 3 

Oct 2 




ratio ytd 

Return • 










2153 12015 


12 Extractive Indusfi1e3(5j 









1138 13984 


15 09, feTOgrreacSa 









2229 13784 










3587 5119 










1783 5083 


V 1 y"tE.x ; 1* 







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1683 3134 









1544 57.17 


1 23 Olernical3(2Q 









2050 7941 









1082 6146 









2097 5187 









1825 6078 









t 7020 

9 •: '1 








1422 77.12 

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1724 4024 











32 AfcoWt BewragesfT} 









1687 10182 

33 Food ProducwsC5) 









34 Houadioid Gooda(17) 









1152 60.11 

36 Heaftii Care(14) 









2682 4188 

37 PhatraacBultaWI^ 









3180 16293 

38 Tabacood) 









1095 24085 


40 SERVICES(274) 









21.74 6106 

41 DteMbutarsCS) 








1889 0987 

42 Lmsuea HowsOO) 









2249 84.16 

43 Mattj(43) 









2784 802* 

44 Betatere. Food(15) 









1071 8045 

45 Raalare, GenaaK54) 









1985 55.72 

47 Bretreriee, Piri» 8 RbslC3 








1586 6178 

48 Support Serv1ces(56J 









2020 3786 

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77 Ofto Rnmd^27) 









2017 8186 









3146 4183 

| r: 1 1 ’ - ’ i * i i A ? 









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105 FTSE AD-Stee ax 171774! 








FTSE Ftodghg 









8000 31.11 









34 JH 3243 










moot 040 

- ag T=- 7 
92465 T 

■ Hourly movements 



Open 980 

10.00 1180 1280 1380 1480 


. 10.10 Mgh/dayLoM/fSay 1 t 

FTSE 250 
FTSE 350 

531B.3 5Z87.4 52780 52786 5281.7 32775 50983 3294.1 5294.4 5309.3 5268,0- 

48884 48783 487XS 4871.6 48708 48684 4887.1 48880 4867.1 4882.8 nacB o 

25488 2537.9 25387 2S315 2534P 2S32.9 2537 J 2533.5 2539.5 25465 26300 

flSE SmrflCnp 2381^8 2381.50 236156 236327 2363.33 236385 238048 2384.13 2384.61 2364^6 236082 

FTSE AB-Shere 248488 247680 240BJB7 2471.14 247685 2472.14 247867 247816 247820 2484.69 

2™ ol FT3E 100 Day^ high! 830 AM nay 1 * KMr 333 AU FTSE 100 1037 IUi 93080 DGnmn Low; Jnmg (ltvm /371 

Tkire of FTBE Al-Share DbjTb Hpz *30 AM Day^ lone 033 AU FTSE Aff-Btarel 1037 l^aaaa) 8»10^li«JW?78 ffiBAI/OT] 

Further infOnmsiun ta svsilabie on hrtpy/www.ttm«om 

O FTSE fnteniadonal LkntfBd 1887. AD Rlghte reaenred. “FT-SE* and ‘Foatdtf a« 
trade m arks of the London Stodc Exchange axl The Financial Tfaraa and tn 
used BY FTSE Irriamattonai mtar Bcanca. 

t Sector Pit ratios {Faster than 80 and net covers greater than 30 are not shown. 
t V alues a re negative. DeteSons: EuwWlar (HokSngs}, WEW Group, m Lister 4 
Oo (FTSE BedgCng) Grasehy {FTSE SmoBCap & 251 AddHow Creative 
PuUe/ikig (FTSE SmallCap & 43). 


I Mta^or Stocks YeatorAgr 

vc*. taoMng ItaF* 
• - owe trice change 


Abbey NHtonaft 

AShnceS Lriboaert 

AngSun HWar 

. 382 

■ 2*1 


Amec, art 
BAAt ’.r 

BOCt - ' 

i 358. 
. 831- 

- 7JBCD 

.Bob Aerospacet 
Britigh AfevreySf 
Brifleh Biotech 

«» r — 

r TUMI o0yf 


Bvmah Caenri 
Burton 7,000 

CSUaEWret. - 8SOO 
Cadbuy SchMppaet -680 
Cemon i.«o 

Cariton Obnana-f 3,100 
Centrtcat . .14200 

Comm. Urftont ' 408 
Cotic«» *33 

Coetaon 1X00 

CourtaJde , - 1,400 

,916b. -b 
411b ; . -« 

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630b . -4 - 
1110 *15 . 

710 -42b ; 
4Mb- *6 
2100 "■•S' 

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107^3 R*Bte* 

307.80 uimi 
8127 FUteri 

145.80 aiMnte* 

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+_ Amcor 80S* +03 SJM 7.M G0 _ ftw 

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AteFou 202 _. 3J71 201 30 2B0 

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AH 1J4 -J1 1® 1® 1.1 444 ^ B ’ a Bater ID® --»# 

iw.nL q+ JUBuril X94* 2® 2 rw aj FNriBk 3S0D +.10 4125 19® 21 1X7 

Z+Z- -+Z_ BW 1 +jg»iB!cixrB at anS - Fragn 28 bo +60 44.46 21 107 _ 

*~0 *W BMtelb 10-30 *M 1X74 1D1 23 166 SMITH SDfi# (Otf 6 / HfcHfl fiama 23.25* +0S 24.75 1500 XB *11 

... ss To? :s uS xa _ _ +,. ute u. «. » -ssjas-s-s m 02 

BM (05* _ 423 308 141X3 c#- MR »*■ «« M Gfi» K +®lS5Oaa.TO20 

0txdCd QX5 n70 038 - 4 . ___ _ _ GrtSi ZBO +JtJ /-BO LLoO bJb Z 2 

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XTO 9J0 6/1X5 M(«®0+TOo2®^- +H «•“ -M ^-844X60 X016/ 

32® +.10 63-2S 29 44 X4 

11 --2H -+02J B.7D _ 230 

X® +JO fl TO 536 157 
X® +® 634 4.15 _ ... 
EPten 11000 --2513650 BB 21 190 
Eton* 18X6 -.53 26-23 14 7.7314 

Bgan 2X10 +® 2X20 2X30 37 124 

Evador ID® -.10 4b 10 44 12 

FNrifik 38® +.10 41® 19® 21 1X7 

Fragri ZB® +®44/G 21 MU _ 

ana 2305* +06 24.7515® XB dl 
Bancor 11.45a +05 14.74 9® 24 22 

99 +® 16150 88.75 20 

2® +® 7® 2® 64 X2 

r awo ,aj gPm z® -m 2 ® xib 73 _ {£££ -^Xx 

. - ,, .. . CkWH 310 —02 M2 203 10 — — ■ n vT M rnm 

ate^ 1.WUB *02 +617 CCAO* 14,95 -.131116 11 1.7 47,7 IS«D 

Ad» COtoU #03 -42 7.15 4/J KZ7.1 17 '“* 

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.110 te*™ 

4 ® _ 3407 121 _ _ 

X79 +.10 7M S.9* 1.1 1X0 

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CHBok 94® -2 135 94 1.1 

CNDsv 9700* -1 1(230 51.12 

cam 21.90 -X 34 24 _ 

Fnffik 95 -413X5? 8*1.1 

WTPKC B2 -2 81® 45 14 

SHKU 7600 -1® 12S7SJ37 14 

1WSC6 142 -800 1733404 _ 

133 1891 JO 1735-38 1445.88 1737.79 16024J84 1898J4 113856 1287.13 ^Step 

43027 384.74 
02J5 8527 

35622 326.81 
95.12 6728 

296J6 272.07 
333.43 305,89 
275.79 253.01 
532J7 48836 

32322 296J2 
43.92 4029 

335J1 308.08 

32ai1 38528 39091 44067 304J2 304J2 

71.10 8528 78,70 96/7 8323 87.14 aeaea 

272/7 32728 343.13 384.11 256J0 25SJ0 

72.78 8728 18224 214JJ7 83J8 199.17 tori 

228J3 272/4 20930 448J1 284.17 303J6 

255.03 306.32 338.72 370.12 301/8 35124 

210J5 25328 311J2 27723 181.79 181.79 

407 JB 46824 50525 53620 363/1 383/1 ^Z2T 

24720 297.03 29024 32929 231 JB 24528 BMU a 

33.60 4025 81.79 13528 37/0 13528 BtateH 

25626 30820 306.06 33720 252.17 25222 W 1 

290.02 359.15 390.93 39220 28227 282.37 flctat —' 

273.63 328. 65 
224.38 260/7 
350.70 42123 
103.05 123,77 
153.87 184.57 
29120 34927 
201.80 242.37 
211.10 253-66 

15727 18820 
10723 23725 
23034 31126 

20060 24323 

Tha WtarW Index (2446 ) — 2BB.1B 

239.53 OJ 1-75 264J7 24ZJB i 

MS KOriMd. TT/SSP ABBteUr b a m mi * * The Rardri Ti 

30123 350.48 
276-60 29626 
450-53 463/0 
10420 16096 
168J0 209.12 
379.09 382.71 

17628 212J0 
23127 26229 
33091 34081 

238.04 26721 

258.40 Capote 
22025 im*™* 
327-70 J* 


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*06 *43 6 FCP® ZX - 300 2.09 12 - gjff -g -S j “ 

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'XA -XA Frtthc 4/2 -02 4® Z® XI — T H A tL Atel [UCt B / Baa) 

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316 . fofeJ S.I0 +05 575 103 23 242 WI8 F 2X7M -XS SXB021.73 6$ _ 

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l A , -J4 395 125 _ 11 J 

4U * 1LB WOR XS&* +07 3/0 200 4.1 120 
IH8 21 J4 +.14 2205 1324 4.1 140 


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PISFt 72 85 50 42150 

Mn 1120 +05 26.75 8.10 4311.1 
45* +® 49.75 3725 141X1 
30* +1 3Z2S 25® 20 100 

moral 13® -.10 10® 11® 2.7 1X7 
37® +®40® 32 _ 1X3 

EG* +® $600 4$ X3 164 

U -35 1X50 9.70 30 100 
37 +®B1® 3425 19170 
II® -03 1405 840 20 17 
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10® +20 30 17 XO XI 

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■ WCCtata ■ 32*883 343340 0 4t10E 2778 18*6 Bn 

H9C atf HT R£a» tmnf ta* to eta tf tav ® nta fe Any tuna: 

toltolltl USE Coign 794.15 79729 731 £8 1271® 2512 73L12 419 

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5*05 54837 550* *897 2271 


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Mtota ta* X 183271 M5B61 195214 2036* 28 77 13*131 7/1 

P1Q tod bn aa nayor Onto atot) ate* cn cancanf ran annas oaOut, 

Pn Un ta 201754 200959 20*853 2280* 107 142970 271 


PWfcta ta* Con 196194 202967 2091/47 3447* 92 195841 20 

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Tudtejr BBS Dal IDO 2048* 2752* 2607* 2649* 6710 

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Tuesday October 7 1997 

Europe and US immune to Asian weakness 


Further weakness in Asian 
stock markets failed to have 
a signi fi cant effect on Wan 
Street or European bourses 
yesterday, writes Philip Cog- 
gan. The Dow Jones Indus- 
trial Average opened sharply 
higher and even with the 
dollar weaker, European 
markets showed, at worst, 
only mild losses. 

A set of strong industrial 
orders numbers from Ger- 
many revived fears that the 
Bundesbank might have to 
raise rates. But optimism 
about US monetary policy, 
in the wake of last Friday's 
non-farm payrolls, acted as a 

Turkey takes off 

Istanbul SE TOO Index ^abased) 
300 — 

The French takeover scene 
received another twist with 
a “white knight" offer for 
Worms, the financial holding 
company fighting off a hos- 
tile bid from Francois Pin- 
ault. Riding to the rescue are 

the Agnelli -controlled IFIL 
company and French insurer 
AGF. As with the rival bids 
for the retailer Casino, a hos- 
tile offer has provoked a bat- 
tling response from a sub- 
stantial shareholder. This 

shows the immense difficul- 
ties facing French predators. 

The phenomenal rise of 
the Turkish stock market 
continued, with the Istanbul 
Stock Exchange chalking up 
a further 3.5 per cent 
advance. Fa lling interest 
rates and the government’s 
plans to accelerate privatisa- 
tion and economic reform 
seem to have been the mai n 
spurs behind rising prices. 

Two lea ding US houses 
recently brought out sharply 
divergent views on the Turk- 
ish market Haluk Akdogan 
at Salomon Brothers said he 
expected “the bullish trend 
to continue, but not as 
strongly, through the first 
quarter of 1998. 

“The market's fundamen- 
tals remain, strong and we 
are bullish on many of the 
blue chips for 1998. Compa- 
nies’ profits have continued 
to Improve as depreciation 
write-offs and financial 
expenses ease; we believe 
that the best is yet to come.” 

But Ali Kerim Akkoyunlu 
at Morgan Stanley Dean Wit- 
ter said: "We feel that tar- 
gets set by the government 
are very ambitious and radi- 
cal, especially given recent 
political uncertainly. If they 
are not achieved, we expect 
it to cause 'disappointment 
among investors. While 
there may still be some 
short-term upside on the 
back of optimistic third- 

quarter expectations and 

positive market sentiment, 
we would advise investors to 
mifP profits and reduce expo- 

Meanwhile, the Deutsche 
B&rse said yesterday that it 
would Initiate the new elec- 
tronic trading system for the 
German cash market on 
November 28. The new sys- 
tem, known as Xetra, will 
replace Ibis. 

Werner Seifert, chief exec- 
utive officer of the market, 
said Xetra wOT offer signifi- 
cant functional improve- 
ments over Ibis, notably the 
automatic matching of exe- 
cutable orders. 

London market. Page 32 

Strong bonds 
give boost to 
US equities 

Frankfurt banks in spotlight 

FTSE Actuaries Share ! ndices 

US equities gained ground as 
Treasury bonds firmed and 
blue-chip stock options and 
futures made their debut in 
the futures exchanges, writes 
John Labate in New York. 

By early afternoon the 
Dow Jones Industrial Aver- 
age had gained 37.87 at 
8,076.40. The broader Stan- 
dard & Poor's 500 index was 
up 5.98 at 97L01. Making less 
impressive gains were tech- 
nology shares. The Nasdaq 
composite index was up a 
mere 4.76 at 1.720.63. 

Yesterday marked the first 
day of options and futures 
trading for the Dow Indus- 
trial Average at the Chicago 
Board Options Exchange and 
the Chicago Board of Trade. 
“It will be another hedging 
vehicle for some and will be 
used accordingly," said Eric 
Miller, chief investment offi- 
cer at Donaldson, Lufkin & 
Jenrette in San Francisco. 

Although the impact on 
stock market volatility has 
yet to be seen, many observ- 
ers expect that an increase 
in daily swings could result 
if it adds to short-term activ- 
ity. “It's likely to result in 
sharper, more jagged, 
changes during the day,” 
added Mr Miller. 

Among Dow stocks. Boe- 
ing shares rose $1£ at $S2ft 
as the company increased its 
estimate of commercial air- 
craft it would ship in 1997. 
An outperform rating by 
Lehman Brothers sent 
shares of Travelers Group 
SI 1 /* higher at $72g. 

Other financial stocks 
Improved as bond prices 
rose. By early afternoon, the 
benchmark 30-year Treasury 
bond was up % to yield 6.25 

per cent. That helped send 
banking stocks higher. 
Chase Manhattan rose $2% 
at $124 and Citicorp gained 
S1& at $139Va. 

Shares in Federal Express 
fell steeply on news that the 
company would buy Caliber 
System. FedEx lost $2 at 
$76% while Caliber's shares 
leapt more than 8 per cent to 


A profits warning by Sili- 
con Graphics sent its shares 
down by more than 33 per 
cent to $17%. Another high 
tech leader. Digital Equip- 
ment. rallied on reports that 
the company was near a 
legal settlement in a dispute 
with chip maker InteL Digi- 
tal’s shares rose 9 per cent to 
$48% while Intel gained 
to $93%. 

TORONTO continued to 
climb into uncharted terri- 
tory. supported by the solid 
start on Wall Street and a 
busy morning for the heavy- 
weight banking sector. 

At the noon calculation, 
the 300 composite index was 
up 24J3 at a fresh intra-day 
high of 7,116.7a 

Banks remained at the 
forefront of investor 
demand. Toronto-Dominion 
gained C$1.55 to C$50.25 and 
Royal Bank of Canada added 
70 cents at C$70.10. Imperial 
Bank rose 55 cents to 
C$40.60. Dealers could find 
no ready explanation for a 15 
cents decline to C$60 JO at 
Bank of Montreal. 

Among techs. Northern 
Telecom rose 35 cents to 
C$147.60 and Newbridge Net- 
works 45 cents to C$87.25. 
News of a share buyback 
lifted software group Cognos 
C$2.00 or 6 per cent to 
C$33 JO. Alcan Aluminium 
shed 25 cents to C$46.45. 

A strong star t on Wa ll Street 
helped FRANKFURT ahead 
in late electronic trade and 
the Ibis-indicated Dax index 
finished 60.18 ahead at 
4,326.35, its best level for 
almost seven weeks. 

German industrial orders 
data for August had little 
effect on the market as it 
was thought the figures 
would not significantly alter 
the interest rate outlook. 

The banking sector bad a 
busy day. Bayerische Hypo 
Bank gained DM6.74 to 
DM85.88 after Goldman 
Sachs reiterated its recom- 
mended list rating on Hypo 
and its merger partner 
Bayerische Vereinsbank, 
DM4.40 higher at DM113-40. 

Commerzbank gained 
DM1J9 to DM67 JO in heavy 
trade. Analysts said the com- 
pany was a front-runner to 
buy Barclays’ investment 
hanking business, BZW. 

Machinery maker Kloeck- 
ner-Werke chalked up a 

Thomson- CSF 

Share price and index (fabasad) 



October 6 
National & Regional 







grass % 

al an 

Total run 

FTSE Eurttop 300 
FTSE button 1D0 








n m 


110 - 


FTSE Eraotap 300 Ragtou 

300 UK 990.72 -063 -629 3.09 0 06 100644 

300 Ex-IK 1009.86 -0.16 -1.64 1.72 0.00 1011.91 

300 EtntfOC T 006.43 +0.09 +091 1.89 0.00 1011.47 

300 Ex-6ioMoc 100457 -0.63 -838 2.44 0.04 1010.08 

FTSE Batting 300 EcwMc Grasps 

tenures) 103111 -053 -647 263 Oil 1045.78 

Smart industries 1028.16 -0.19 -192 1.69 0.00 102955 

Consume Goods 95090 -026 -2.53 196 0.00 9629)6 

Semcas 98598 —O.ll -1.09 2.19 0.00 990.10 

limbs 978.40 -0.76 -750 3.13 600 96339 


Base nee 1000 tor e tou B w m UBti/mmSsim USE (M Tone am rtpeera me rata a oe Imtn 
Snot Esttrat «e n* FtaM nam. ba*’ a • rafaew Bab rati or m Aomen 9a* Eaavge. FTSE 
baas taxes an napfeu to FTSE Menaa w t O ftz mutpjuf Iran i®7 a npa ranwtfJtowr osar 

Moevenpick rose SFr35 to 
SFr480 on speculative buy- 
ing following an announce- 
ment about a Middle East 
hotel joint venture. 

BULAN gave up early 
gains to close lower on wor- 
ries that talks between 
prime minister Romano 
Prodi and Reconstructed 
Communist leader Fansto 
Bertinotti might not bridge 
their differences over the 
1996 budget. 

The Mibtel index closed 77 
lower at 15,438 after Mr Ber- 
tinotti re-iterated his opposi- 
tion to the budget ahead of 
the talks. Leading shares 
were mostly weaker. 

telecom Italia rose on 
news the government would 
sell its entire stake in this 
month’s public offering, 
rather than hang on to a 

2001 Aug 1867 
Somck P —W n8CV 


Sao Paulo edges ahead 

SAO PAULO moved back 
Into high gear in morning 
trading with telecoms shares 
finding renewed favour. Fol- 
lowing Friday's publication 
of the privatisation model 
for Telebras, the telecoms 
giant, the market closed 
with relatively modest gains. 

"There was a two-way tus- 
sle on Friday and we were 
hit by some profit-taking. 
But the market has settled 
back on the bull track this 
morning.” said one broker. 

By midsession, Telebras 
was sitting on a gain of 2 per 
cent at R$157.1 while the 

Bovespa index was up 170 or 
1.4 per cent at 12.711. 

modestly higher in thin vol- 
ume. Telmex improved 15 
centavos to 2a 50 pesos but 
there was limited activity. 
Levels of volume were nomi- 
nal. excluding a single large 
cross trade in holding com- 
pany Accelsa. At midsession, 
the 1PC index had hardened 
6.25 at 5,320.43. 

SANTIAGO ran into mod- 
est profit-taking in light 
morning trade. At midses- 
sion, the IPSA index was off 
1J1 at 125.71. 

DM7.90 rise to DM133.80 
after the company offered to 
pay creditors a cash sum to 
dissolve a debt settlement 
that it said would have left 
lenders empty-handed. 

PARIS remained stub- 
bornly in low gear in spite of 
a counter-bid for Worms and 
continued speculation on 
corporate activity at 
Thomson-CSF. In fairly nom- 
inal volume of 8m shares, 
the CAC 40 index ended off 
16.03 at 3,077.98. 

Talk of an imminent deci- 
sion on a new owner for the 
government's 58 per cent 
shareholding underpinned 
defence group Thomson-CSF. 
The shares rose FFr2.90 to 
FFr190 for an advance since 
the lows of mid-August of 
almost 30 per cent 

Lagarti&re. which is widely 
tipped to win the race for 
CSF. gained FFr6.70 or 3.6 
per cent to FFr194. Alcatel 
Alsthom. which along with 
Lagarddre took part in an 
earlier CSF auction, came off 
FFrll.00 to FFr814. 

Media group Havas rose 
FFr to FFr414 after a minor- 
ity shareholders association 
argued that big shareholder 
Generate des Eaux ought to 
make a full bid for the com- 
pany. Eaux added FFr9.00 to 

Foods leader Danone put 
on FFr5.00 to FFr973 amid 
continued speculation that 
the group is set to announce 
a major disposal. Talk also 
turned to the 3J per cent 
stake in Danone held by the 
Worms financial group. 

Worms shares were 
suspended along with those 
of counterbidder AGF. The 
insurance leader is linking 
up with IFIL of Italy to chal- 
lenge the bid for Worms 
from Artemis, the holding 
company of French business- 
man Fran cois PinaulL 

AMSTERDAM produced a 
number of strong individual 
price movements within a 
dull overall performance 
which left the AEX index 
little changed at 961.81, 
down 1.51. 

PolyGram jumped FI 3.70 
or 3 J per cent to FI 121 2 on 
talk of a strong box office 
response to recently- 
launched films. KLM gained 
FI 1.00 to FI 75.4 following 
upbeat traffic figures for 

Internationals contained a 
number of weak spots, nota- 
bly Philips which fell FI 6 JO 
o r 2.9 per cent to FI 171 J. 

ZURICH pulled back in a 
correction after last week's 
sharp advances, but prices 
finished off intra-day lows. 
The SMI index lost 31.60 at 

Among the pharmaceuti- 
cals. Roche certificates lost 
SFrl50 to SFxl3,340 after the 
chairman was quoted as say- 
ing the company was keep- 
ing an eye out for acquisi- 
tions. Novartis eased SFrl6 
to SFi2 J14 as SocGen reiter- 
ated its outperform rating. 
Clariant lost SFrl2 to 
SFri J04 but Ciba SC gained 
SFr3.75 to SFT147J5. 

ABB was SFr8 higher at 
SFr2J29 following a $700m 
National Power plant order. 

minority as in past privatisa- 
tions. The shares were L72 
higher at L10.987. 

Shares in Agnelli- 
controlled holding company 
Ifil slipped L168 to L6.088 
after it said it was joining 
France's AGF in a counter- 
bid for Worms. 

ISTANBUL refused to be 
deflected from its record- 
setting ways, even by 
higher-than-expected Sep- 
tember inflation figures, 
re leas ed late on Friday. The 
IMKB National 100 index 
climbed 97 or 3J per cent to 
2,849 as 1998 economic tar- 
gets predicted by Turkey’s 
top p lanning body and lower 
bond yields reinforced the 
five-week long rally. 

Written and edited by Michael 
Morgan, Jeffrey Brown, Jona- 
than Ford and Steve Com. 


Shares in Johannesburg 
moved higher for the fifth 
successive session with solid 
gains in both industrials 
and golds pushing the all- 
share index np 23.4 to 
7,237.4 at the dose. 

Dealers said volumes were 
on the dull side but that a 
generally firmer day had 
been rounded off late in the 
session by futures-led buy- 
ing. Golds gained 16.7 to 
1,058.8 and industrials 42.7 
to 8J10.1. 



Indonesia's currency and T 
stock market lost more* 
ground yesterday, although 
central bank intervention- 
and promises of further 
economic reform helped 
cap the downturn. . 

The rupiah lies at the 
heart of the currant mal- 
aise. It fell 1.6: per cent to 
3.717 to the dollar after 
touching! &n all- time low of 
3,862 during the morning. 

In the' share market, the 
Jakarta composite index, 
down 4 per cent on Friday, 
tumbled below the 500- 
polnt level at one stage 
before rebounding to close 
at 512.893, down 2.584 on 
the day. 

Traders said the Bank of 
Ind onesia spent less than 
$300m in a thin market to 
back the rupiah in its first 
significant intervention of 
recent weeks. Few locals 
have dollars and in August 
forpjgn hanks were banned 
from selling more .than.. 
$5m. • 

In the equity market, 
meanwhile, brokers started 
buying back some blue 
chips after officials prom- 
ised reforms this week. Fol- 
lowing an emergency meet- 
ing between . President 
Suharto and key officials, 
the government promised 
help for exporters and said 
it would abstain from fix- 
ing the rupiah, which has 
dropped from 2,600 to the 
dollar since the govern- 
ment stopped defending its 
trading band in August 
But brokers remained 
pessimistic. One. trader said 
demand far dollars totalled 
at least $20bn and ques- 
tioned how long the central 
bank could intervene. 
While demand has been 
driven mainly by Indone- 
sian companies eager to 
pay off unhedged 
short-term defat, another 
trader said clients were 
requesting dollars for debt 
that was not due; until 
November. - 

“Somebody should tell 
the locals to stop hedging - 
to stop acting irrationally 
the trader said. “If the 
rupiah hits 4,000 there will 


Jakarta Composite. 

790 ■- — -r' 

i'5 »■ 

•«g o ' ■ 1 

; iee£ 

SoorecCe mgata TvCV : _v 

be massive defaults. It’s a 
self-fulfilling prophecy." 

In the equity market; the 
composite index has 
dropped 30 per cent' in 
recent months, trailing- the 
fall, of the rupiah, .which, 
boosted the cost of servic, 
ing company debts. Worst 
bit were manufacturing 
and banking stocks . .With, 
the greatest exposure! to 
foreign debt. 

Neil Saker,- head .of 
research at SocGen Crosby 
in Singapore, said few pT 
Indonesia's exporters - were-, 
listed, which limited the 
positive impact! of -the 
depreciation on the index 
and highlighted the nega- 
tive effects. 

Some analysts haviT 
blamed foreigners- for 
generalising the southeast 
Asian markets. But'- traders-- 
say much of the downward ] 
pressure is coating .from 
Indonesians, who . -have, 
overtaken foreigners as the 
exchange's biggestjilayera. 
They are rushing . to. huy' 
dollars to pay off debt, and-} 
many Investors fear the 
rush indicates, there is 
more debt than they knew, 
and less of it hedged ' or- 
backed by collateral. .* 

Hie sharp drop h*& 
raised concern about the 
long-term impact on Indon- . 
este's economy. The. coun- 
try's foreign debt, at more 
than ttOObn, has suddenly 
become 40 pet . cent, more 
exp ensiv e to pay afL ; . ", " 

— SanderTboenes 



Manila hit by foreign selling 


A wave of selling pushed 
MANILA steeply lower as a 
sharp rise in money market 
rates heightened liquidity 
fears. The composite index 
crashed down through the 
2,000 level and at the close of 
trading was wi thin sight of 
Its low for the year at 
1,961.24, off 3.4 per cent or 

Dealers said trading vol- 
ume was thin wtth senti- 
ment deeply depressed as 
overnight money rates rose 
above 100 per cent. There 
was said to be heavy foreign 
selling of leading stocks. 
Metropolitan Bank fell 33 
peso to a two-year low of 242 

TOKYO rallied for the sec- 
ond successive session on 
steady buying by domestic 
Institutions, which were said 
to be supporting the market 
ahead of tomorrow's listing 
of Central Japan Railway. 
writes Gwen Robinson. 

The Nikkei 225 average 
rose 177.33 to 17J34.78 after 
trading between 17,635.86 
and 17J54.45. 

Traders said pension funds 
and securities dealers were 
the only active investors and 
were likely to remain so 


Indices (rebased) 

65 L - 

ManSa Corrpaans 

■bti 1997 

Souck OntatoBitACV 


until the privatised railway 
company's listing tomorrow. 

However, they added that 
market mood remained weak 
amid growing pessimism 
about the economy. The gov- 
ernment is expected to 
announce economic mea- 
sures, including steps to 
revive the property market, 
later this month. 

Volume eased to an esti- 
mated 349m shares from Fri- 
day’s 371m. The Topix Index 
of all first-section stocks rose 
12.91 to 1,391.06 and the 
capital-weighted Nikkei 300 
was up 2.56 at 276 Jl. 

In London, the ISE/Nikkei 
50 index rose 2.35 to 1.642.49. 

Companies with poor earn- 
ings prospects suffered 
heavy selling. Mitsukoshi 
fell Y80 to Y450. Marubeni 
Y22 to Y366 and Mitsui Engi- 
neering and Shipbuilding 
Y14 to Y130. 

Yaohan Japan, which 
announced a bankruptcy fil- 
ing last month, was the 
day’s most active issue. It 
rose Y6 to Y9 on news of 
financial assistance from 
Jusco, another supermarket 

In Osaka, the OSE average 
rose 176J0 to 18,178.26 in vol- 
ume of 15m shares. 

HONG KONG tumbled 2J 
per cent on profit-taking in 
finance and property shares, 
but analysts said turnover 
was so weak that the fall 
was not worrying. 

The Hang Seng index 
closed 351.24 down at its low 
for the day of 14,776.7a Turn- 
over was just HK$12.6bn. 

HSBC, which rallied last 
week on expectations that 
Britain would join European 
monetary union sooner 
rather than later, gave up 
HK$6 at HKS256. 

Hongkong Telecom, higher 
in the morning on demand 
from investors buying it as a 
proxy for China Telecom, 
finished 25 cents lower at 

HK$18.10 in heavy trade of 

The property sector was 
weak ahead of the first pol- 
icy address to the legislature 
by Hong Kong’s chief execu- 
tive, Tung Chee Hwa, on 
Wednesday, which was 
expected to include a plan to 
alleviate the shortage of low- 
cost housing. Cheung Kong 
slid HK$3.75 to HK$83 and 
China Resources HKS2.60 to 

The red chip Hang Seng 
China-Affiliated index slid 
186.57 points, or 5.4 per cent 
to close at 3J46.83. 

BANGKOK fell l j per cent 
on rumours that next week’s 
financial reform package 
may require some institu- 
tions to raise working capi- 
tal. The SET index came off 
6.32 to 542.05 on Btl.Sbn 
turnover. Bangkok Bank lost 
Bt3 to Btl26 and Siam 
Cement Bt2 to Bt422. 

SINGAPORE was marked 
lower, led down by the weak 
performance of the property 
and electronics sectors, and 
the Straits Times industrials 
index ended 2L46 down at 
1,880.58. Among electronics 
stocks. Creative Technology 
was S$1J0 off at SS39.20 in 
response to the weak 
regional outlook. 

When the City of Buenos Aires 
wanted to win over international investors 



The City of Buenos Aires tapped Chase* expertise in emerging markets 
to structure and place $500 million in international bonds - the CJxyk debut in 
cross-border capital raising. The financing was a customized solution executed 
across three separate marke ts - Eurodollar, Eurolira and Argentine peso. 

P!aa de Maya tacaoa Ahem 

*Our first cross-border offerings were an impressive introduction of 
Buenos Aires to investors around the world. Chas rt track record in 
emerging mark ets and their network of global investors were key 
to our success” 

Adalboro Rodriguez Cfawrim 

S ccxe my of Tbcaaury 
The Otr of Boeno! Aire* 

CHASE. Tlie right relationship is everything.* 

e 1997 The Chuc M*nhatm Corpomno. 


J htfift ^ 



7 1997 

1 ' ^anci ai n m ns survey 

Tuesday October 7 199' 

Support for a return to the motherland has 
dwindled during the ‘island's decade-long 
tuition to democracy but Beijing refuses 
to stand down, reports Laura Tyson 

Searching for 
national identity 

T he title sounds' harm-, 
less enough; “Getting 
to Know Taiwan**. But 
a new textbook on the his- 
tory of die island off China’s 
sooth-east coast unleashed a 
storm of criticism — and a 
hail of eggs'- on the educa- 
tion ministry from both en ds 
of the p olit ic al spectrum. 

The contr o versy over the 
new social -studies text, 
introduced to middle school 
classrooms just weds ago, 
cots to the heart of Taiwan's 
dilemma: is Taiwan a nation, 
or just a tiny appendage of 
China? In' the island’s con- 
tinuing search fin: national 
identity, neither indepen- 
dence activists or reunifica- 
tion stalwarts are satisfied 
with the content of the text 
that will be shaping the ten- 
der minds of the younger 

Schoolchildren memorise 
China's mountains, rivers, 
and dynasties going back 
5,000 years but learn next to 
nothing about Taiwan. Wu. 
Jin, the re&rm-tamcted edu- 
cation minister, believes it Is 
time fur a change; "We have 
been an this island for so 
long, we really need to learn 
more about its history wntf 
culture." ' 

But while some^ critics say 
it is too China-centred, othT 
ers feel the textbook is 
designed to pave the way far 
Taiwanese . independence. 
"We are all Taiwanese, but 
we are still Chinese 400 ," 
asserts Mr- Fn Kun-chen, a 
parliamentary legislator 

from the opposition New 
Party, which advocates 
reunification with China. 
- “We know very clearly Presi- 
dent Lee Teng-hui is 100 per 
cent pro-indep endence . " 

President Lee, elected in a 
landslide victory in the 
country's first democratic 
presidential elections last 
year, repeatedly denies that 
be or his ruling Nationalist 
party seek formal indepen- 
dence. He insists that china , 
which regards Taiwan as a 
wayward Chinese province 
eventually to be regained, 
must face the reality of two 
separate governments on 
either side of the Taiwan 
strait since 1949. But Beijing 
demands that Taiwan kow- 
tow - and Taiwan’s refusal 
to do so has pitted the two 
sides in decades of confron- 

Following Hong Kong's 
transfer to Chinese sover- 
eignty, Beijing is. eager to 
faring Taiwan into the fold of 
the motherland. But- unlike 
Hong Kong there is no treaty 
under which Taiwan is to be 
handed over at an appointed 
hour. Beijing threatens to 
use force against Taiwan 
should' it seek formal inde- 
pendence, but in practice 
Taiwan comes under tbe 
security umbrella - either 
explicitly or implicitly - of 
-the US and Japan, both of 
which. have a.'keen interest 
in Taiwan both for strategic 
and eccmomic: reasons! 

Meanwhile, support for a 
return to the -motherland is 

f a lling in Taiwan following 
the island's decade-long 
transition to democracy. For 
tbe first time, a July public 
opinion survey showed more 
people support independence 
than unification. Taiwan 
officials hope that cross- 
strait contacts, which China 
angrily severed when Presi- 
dent Lee visited the US in 
June 1995, can be resumed 
next spring. But it is difficult 
to envision how the two 
sides will bridge the ideologi- 
cal divide that separates 

At times the stand-off h as 
hurt Taiwan’s economy, as 
during the March 1996 presi- 
dential polls when China 
staged missile tests near 
Taiwan and nervous inves- 
tors sold stocks and the 
Taiwan dollar. “This is a 
crucial issue for Taiwan’s 
future, but unfortunately it 
cannot be solved by the 
people In Taiwan alone," 
says Wang Chung-yu, chair- 
man of China Steel, 
Taiwan’s leading steel- 
maker. “We need some sup- 
port from the international 

Taiwan has strong unoffi- 
cial ties with the US and 
other industrialised coun- 
tries but a dwindling num- 
ber of diplomatic allies. Few 
countries are willing to back 
Taiwan at the risk of offend- 
ing China - as was evident 
at last month's Panama 
Canal conference, where 
world leaders and the United 
Nations declined to attend 


rj • -'Matsu 

V\v V 

36.000 aq km 

MmiarinChineae (oSfcHl. 
Taiwanese widely Spoken 

SOnaap • 

l new Taiwan doftar (NTS) * 100 cents 
■ Bcef W HQai— a: 

1996 awriea Si - NTS 274558 
September 30 1997 SI - NtS 2&509S 

21.450400 fiwe esti 

I Main towns amt population 
fttamtaSI 19BS 
Taipei {capital) 2,622.863 

Kadhetoig ' 1.426,035 

TaMHtf. ' 853.221 . 

Tainan ' 708.811 

Panchiao .530403 

Tefowl v, Mailing 







Total GDP, nominal (Sbn) 



Red GDP growth (annual 96 change) 



GDP par head (6) 



Inflation (annual % change in CPfl 



tndusmal production (annual 96 change) 



Recorded unemployment rate (96 of labour force) 2.6 


Money supply. M2 (annual % change) 



Foreign exchange reserves (Sbn) 



Government mpandtire (% of GDP) . 



Total foreign debt [% of GDP) 



Cwrent accoint balance (Sbn) 



Merchandise exports (Sbn) 



Merchancfisa imports (Sbn) 



Trade balance (Sbn) 



Main trading partners <% share of total trad® to world, 1 996) 

US ‘ A ' . .234 • 

Japan 2E t.:- 


Hong Kong . 23.1 1 


Japan ~ ’ 114 ; Germany T 1 53 

Singapore 33 ’ S. Korea [^4.1 

FxiKYrts ' 

Netherlands 3.3 ; Malaysia • : 3 & 



• Form of state: Representative 
democracy is in the process of 
emerging from a one-party state 
■ The executive: The presidem 
nominates a prime rrtrvsier to head 
the Executive Yuan (cabinet). The 
Executive Yuan has three arms: the 
ministries and commissions: the IB 
su Usd ti m e administrative organa of 
state; and the Executive Wan 

Couid. nommaBy the supreme 
policy -making body (although poOcy is 
reaSy made ay the leaders of the 
Kuommtang. the ruling party) 

• Head ed state: President, currently 
Lee Teng-hu. efireetty elected for a 
term ot four years. 

• National legislature The Legislative 
Yuan, formerty a rubber-stamp 
parliament, has In the post decade 

become a genuine forum for debate 
and the development of policy. The 
National Assembly, now ftXty elected, 
decides on constitutional changes 
• Local government A pro v in cia l 
asembty and a series of local couidis 
operate, but function manly on an 
ac Wn i s Pat i vB level. The provindai 
assembly may be scaled down 
■ National government The 

Kuomintong controls ail executive, 
legislative and admMstntilve organs 
■ National ex actions: December 1995 
{Legislative Yuan) and March 1996 
(presidential and National Assembly); 
next elections due by December 1998 
(local government and Legislative 
Yuan) and March 2000 foresfoontial): 
National Assembly and provincial 
elections have ban suspended 

Soirees: Eiaopst DatasaewnflCV; Reuters; EBJ 

because President Lee would 
be there. Panama is 
Taiwan's most important 
remaining ally. 

In the absence of progress 
in cross-strait relations, tbe 
government is focusing its 
attention on the domestic 
front. This was signalled by 
the appointment of Vincent 
Siew, a former trade negotia- 
tor and p lanning minister , to 
take over the premiership in 
September. Mr Siew is one of 
a “new breed" of technocrats 
with a mandate to re-engi- 
neer government and to 
make industry more compet- 
itive. “The government 
bureaucracy does need to 
reduce some layers,” says 

Douglas Hsu. chairman of 
the Far Eastern group, one 
of Taiwan’s biggest business 

Taiwan has prospered this 
year as political uncertain- 
ties receded and the econ- 
omy recovered. Taiwan 
escaped virtually unscathed 
from the financial woes that 
racked south-east Asia this 
past summer. “Fundamen- 
tally we are very strong," 
says Chiang Pin-kung, chair- 
man of the cabinet's Council 
for Economic Planning and 
Development. “We rely on 
our own investment, not 
from foreigners, and our 
entrepreneurial spirit is very 

Earlier fears of “hollowing 
out" of the economy have 
evaporated. The first wave of 
overseas investment that 
began in the late 1980s is 
slowing down, and the pace 
of investment in China is 
declining. Meanwhile domes- 
tic capital investment is 
growing, especially in the 
high-technology sector. 

“The structure of Taiwan’s 
economy has changed from 
manufacturing-based to tech- 
nology-based.” says Benny 
Hu. president of China 
Development Corp, Taiwan’s 
leading venture capital con- 
cern and an important inves- 
tor in high-tech. “In electron- 
ics we have become a big 

player. Taiwan is now the 
world’s third biggest pro- 
ducer of information tech- 
nology and in semiconduc- 
tors, we are number four 
and more capacity is being 

Taiwan will continue to be 
highly attractive for high- 
tech investment, Mr Hu 
believes. “Because it is so 
easy to raise money on the 
Taiwan stock market, the 
environment is very encour- 
aging for capital-intensive 
projects." That applies to tal- 
ent too - Taiwan is seeing a 
reverse brain-drain as US- 
trained overseas Chinese 
engineers flock back to the 


• Foreign relations: 
Glimmer of hope for talks 

Page 2 

• Education: New 
minister weathers the storm 

Page 2 

• China Development 

Corporation: Spreading its 
wings and Its investments 
US Page 2 

• Finance: Growing 
demands for diversity 

Page 3 

• Labour; How to fill 

unwanted jobs Page 3 

• Bicycle industry: Cycle 

of expansion US Page 4 

• FT industry: Cycle of 

expansion US Page 4 

• Economy: Port 
expansion fuels exports 

Page 5 

• Nuclear issues: 

Protests over waste 
dsposal plan Page 5 

• Far Eastern; From 
textiles to telecoms Pages 

• China Steel: Spreading 

from the core Page 6 

• Taipei’s mayor. 

Crowd-pleasing policies 
and antics Page 6 

The popularity of the rul- 
ing Nationalist party will be 
put to the test, however, in 
county' chief and city' mayor 
elections in December. Pub- 
lic concerns over such issues 
as rising crime, environmen- 
tal degradation and gangster 
influence in politics could 
spell the end of Nationalist 
control of a majority of the 
country’s 23 politically pow- 
erful regional administra- 
tions. These elections have 
taken on heightened impor- 
tance in the wake of consti- 
tutional reforms this year 
shrinking the provincial gov- 
ernment and transferring its 
powers to the county and 
central governments. 

The polls are also a test of 
the public confidence in the 
ability to govern of the pro- 
independence Democratic 
Progressive party, now that 
the leading opposition has 
had a chance to prove itself 
in key posts. The DPP now 

Continued on Page 6 

>s; *. f * T ' "■ . 

i la ' 

Cathay Pacific 


■f. „ A-A- - V 

5 Tf .- T v- •• ' 

Touchdown aroor 

TOaUwirie OfcbSiie: 

‘ V 




FOREIGN RELATIONS * by i aura Tyson 

EDUCATION • by Laura Tyson 

Glimmer of hope for talks Weathering 

the storms 

Businesses have a 
vested interest 
in improving 
with China 

For the first time since 
Beijing angrily severed con- 
tacts with Taipei in June 
1995 after Taiwanese Presi- 
dent Lee Teng-hui visited 
the US, there are now glim- 
mers of hope that talks 
between the long-time rivals 
may resume. But while 
hopes are rising the obsta- 
cles to friendlier relations 
still loom large. 

Such talks are regarded as 
crucial to paving the way for 
lasting peace and stability 
across the Taiwan Strait and 
buoying economic prosperity 
for both China and Taiwan. 
Taiwan’s business commu- 
nity as well as foreign par- 
ties including the govern- 
ments of the US and Japan 
have strongly urged the two 
sides to return to the negoti- 
ating table. 

“We are preparing for the 
agenda, including political 
and policy matters, as part 
of the cross-strait dialogue 
which we hope would be 
able to be restored next 
spring," Chang King-yu, 
chairman of Taiwan's cabi- 
net-level Mainland Affairs 
Council, said last month. 
The MAC is charged with 
shaping Taiwan’s China pol- 

Under China's pressure, 
the number of countries 
which officially recognise 
Taipei has dwindled to 30, 
leaving Taiwan isolated in 
the international arena 
despite strong economic ties 
with large industrialised 
countries. Now that Hong 
Kong has reverted to Chi- 
nese sovereignty. Beijing is 
expected to step up pressure 
on Taiwan to “return to the 
motherland". But even if the 
“one country, two systems” 
formula is a success in Hong 
Kang, Beijing will have to 
work harder to persuade the 
Taiwanese that unification is 
in their best interest. 

Taiwan's business commu- 
nity is especially keen to see 
improved ties, which would 
offer Increased trade and 
investment opportunities. 
Douglas Hsu, chairman of 
the Far Eastern group, a tex- 
tiles- to-telec oms conglomer- 
ate that is one of Taiwan's 
biggest business groups, sees 
as positive the promotion of 
economics tsar Zhu Rongji 
to number three in the Chi- 
nese Communist Party, a 
move which signals that be 
will become premier next 

“We have entered an inter- 
esting period where growth, 
industry, management, 
increasing efficiency and 
competitiveness will be the 

The presidential palace In Tajpec Taiwan views itself as a de facto independent sovereign state 

Photo. Strati 

main target for both sides," 
says Mr Hsu. “This is good - 
to let politics and interna- 
tional relations play a lesser 
role. From Taiwan's point of 
view we need to start talking 
to each other and get closer 
and hopefully we can put 
this antagonism be hin d us 
and move into a more conge- 
nial mood.” 

In expressing a willingness 
to discuss political matters. 
Mr Chang signalled a signifi- 
cant change in Taiwan's 
position. Taiwan has previ- 
ously insisted that the talks 
be confined to economic and 
administrative matters. But 
a seemingly unbridgeable 
ideological gulf remains and 
it is not clear how either 
side can back down without 
losing tremendous face. 

China regards Taiwan as a 
rebel Chinese province even- 
tually to be brought back 
into the embrace of the 
motherland. As such Taiwan 
is not entitled to foreign 
relations and Beijing spares 
no effort to prevent Taiwan 
from playing a role on the 
world stage. 

At the 15th Communist 
party congress last month, 
China's President, Jiang 
Zemin, repeated Beijing's 
threat to use force against 
Taiwan should it move 
toward formal independence. 
But Taiwan views Itself as a 
de facto independent sover- 
eign state since civil war 
divided China in 1943 and 
insists that it should be 
treated by Beijing as an 
equal, not as a local govern- 

Both sides call for even- 
tual unification across the 
Taiwan Strait but the 
island’s ruling Nationalist 
party insists this goal can 
only be accomplished once 
China becomes a prosperous 
democracy like Taiwan. 

Meanwhile Taipei sees its 
foreign relations drive - so 
detested by Beijing - as cru- 
cial to its survival, and a 
public opinion survey last 
month showed that 77 per 
cent of Taiwanese agree. 
Only 16 per cent of those 
surveyed thought that 
Taiwan should tone down 
foreign policy because it irri- 
tated China. President Lee 
Teng-hui's trip to Latin 
America last month to bol- 
ster ties with Taiwan's allies 
in the region - the most 
important of which is Pan- 
ama - elicited protests from 
Beijing. China succeeded in 
deterring heads of state 
including US president Bill 
Clinton and the United 
Nations from attending what 
was meant to be a global 
summit to discuss the future 
of Panama Canal because of 
to Mr Lee's presence. 

Critics at home questioned 
the expense of the trip as 
well as Mr Lee's timing and 
Style. In' speeches during his 
four-country tour of central 
America and Paraguay, he 
attacked Beijing’s “hege- 
monicT attitude - a choice of 
words seen as unnecessarily 
provocative by some. 

But despite some negative 
repercussions on cross-strait 
relations, Mr Lee still has 
the strong support of busi- 
ness leaders. “To be a de 
facto country with its own 
government, you have to 
have friends. To have some 
friends, you can't just be 
cooped up, sitting at home 
all the time - you need to go 
out,” says Douglas Hsu, 
“The biggest problem is that 
China feels that as part of 
greater China you shouldn't 
be doing that But interest- 
ingly. if C H Tung can be out 
visiting, it does seem like 
there are two standards." he 
added in a reference to the 




President Lee Tervg-hut enjoys strong business support 

chief executive of Hong 
Kong, who recently visited 

There is still room for a 
breakthrough. Both sides 
hint at the possibility of a 
cross-strait summit meeting, 
but disagree on protocol. 
Jiang Zemin recently pro- 
posed a meeting between 
himself in his capacity as 
head of the Communist 
party and Mr Lee as head of 
the Nationalists, but it was 
vetoed by Mr Lee who said it 
was inappropriate because 
China is a one-party state 
and Taiwan is a multi-party 

For his part Mr Lee has 
frequently expressed the 
desire to make a “journey of 
peace” to China, but insists 
the first item of business 
must be a bilateral peace 
treaty - something that 
China rejects on principle. 

The advent of democracy 
in Taiwan means that the 
government is not in a posi- 

tion to ignore papular feel- 
ing. Apart from the business 
community, which consti- 
tutes a minority of voters, 
Taiwanese are generally 
wary of moving quickly to 
improve ties with China. 

In practical terms, the 
public perception is simply 
that there is little if any tan- 
gible upside potential to 
malting - concessions to China 
but there are many obvious 
and significant downside 
risks. Talks will likely 
resume at some point and 
economic ties will steadily 
increase, but unless that 
equation changes dramatic- 
ally it is unlikely that cross- 
strait political relations will 
substantially improve. Lead- 
ers on both sides could do 
worse than to heed the 
words of Douglas Hsu: “If 
everyone would be a bit 
more practical, if everyone 
could take a step back, then 
we could get on with busi- 

An oceanographer 
is trying to 
transform the . 
climate in schools 
and unversities 

By day he dreams up 
schemes to slingshot 
Taiwan's rigid and exam- 
centred education system 
from the 19th century into 
the 21 st. By nigh*, he seeks 
to fathom the mysteries of 
weather systems interacting 
above and below the ocean's 

The multi-faceted man in 
question is Wu Jin, who in 
his first year at the helm of 
Taiwan's conservative edu- 
cation ministry has the 
dubious distinction of hav- 
ing attracted more eggs to 
be pelted at his building 
than any other government 
agency- “At least they are 
paying attention — I know I 
am mafcTTig an impact," he 
says of demonstrators pro- 
testing about a new text- 
book on Taiwan. 

Mr Wn is not averse to 
ruffling a few feathers. In 
fact that’s why the oceanog- 
rapher, who once worked 
for the US Department of 
Defence and continues his 
research at nights and week- 
ends, was hired. After 20 
years in the US be came 
back to Taiwan three years 
ago to head Cheng Kung 
University in southern 
Taiwan. Then, unexpectedly, 
he was tapped to revolution- 
ise Taiwan’s education sys- 
tem last year by President 
Lee Teng-hni - who had 
studied in the US himself. 

In many ways Mr Wn is 
representative of a genera- 
tion of Taiwanese who left 
the island never intending 
to return but now find them- 
selves coming back - 
attracted by the Imre of a 
newly democratic society 
and the opportunities 
offered by a dynamic econ- 

The enormity of the task 
of overhauling Taiwan's 
antiquated education system 
does not escape Mr Wu - 
nor does it appear to daunt 
him. “We have to change 
the value system, the think- 
ing of this society," he says. 
“We have to develop some 
mutual trust among people, 
and 1 have to restore the 
public trust in and the credi- 
bility of the teaching profes- 

There is widespread agree- 
ment that Taiwan's educa- 
tional regime is too rigid, 
narrow and exam-oriented 
to foster the creative and 
critical thinkers the country 
will need to remain competi- 

Wu Jtac “We need to train students to synthesise, to analyse" 

tive In the next century. But 
few are willing to tamper 
with the system regardless 
of bow gruelling it is, 
because they believe that 
under any less objective sys- 
tem people would bribe, and 
cheat their way into the .top 

Mr Wu calls it an “inhu- 
mane” system which he lik- 
ens to a “cult”. A student’s 
entry into junior high 
school is the beginning of a 
“dark age" of cram schools, 
tests and constant study to 
attain the holy grail - pass- 
ing the college entrance 
examination. “The pressure 
is incredible.* he says. Stu- 
dents commonly set their 
alarm clocks to get up in the 
middle of the night for a few 
hours of study. 

The Taiwanese call it a 
“stuffing-the-dnck” system. 
“Taiwan’s education system 
is designed to train people 
to memorise and to take 
tests, not to educate them: 
This is very bad,” Mr Wu 
says. “We need to train stu- 
dents to synthesise, to anar 
lyse information, because in 
the 21st century the human 
mrnri cannot compete with 
the computer." 

In the past, fewer than 20 
per cent of those who took 
the college entrance exam 
were admitted to university. 
Now nearly 60 per cent 
make it. However, the com- 
petition is intense, because 
everyone wants to get into 
the “elite" universities. 

Mr Wu wants to get rid of 
the rigid tracking system 
beginning in junior high, ; 
which he calls “totally 
unjust”. Thirty par cent of 
students are placed in col- 1 
lege track and the remain- 
der arc stuck in a vocational 
track with no possibility erf 
getting out “Teachers spend 
most of their time training 
the 30 per emit to get into 
good colleges, and often 
solicit fees from parents to 
coach students,” he: says. 
“For the rest, the teacher 

basically just maintains 
order in the ; classroom. 
From an early age. those 70- 
pm emit are labelled as. fail-: 
ures and they give up hope. 
That’s not right.” ’ - 
During Taiwan’s Indus? 
triallsation phase, develop- • 
Ing skilled labour with good 
numerical skills was para- . 
mount, and helped; fuel-. 
Taiwan’s spectacular , ecu-, 
nomic growth. But Taiwan 
is transforming hito a capi- 
tal- and technology-inten- 
sive economy, with rapidly 
growing services. “We have 
to get all students up to 
speed," says Mr Wu. “Many 1 
people deny the contribution 
of the 70 per cent. Bnt tfce 
fact is they comprise the 
majority of Taiwan’s most 
successful entrepreneurs-” •= 
He blames T a iw a nese par-' ' 
ents for the extremes -of * 
system which forces , kids- to 
become “test machines”; in ~ 
the words of one, which pro-'' , 
vents them from playing 
sports during their teenage 
years and which prompts - 
some to commit suicide if - 
they fail an «ram. “parents 
drive their kids to do this,-;! 
and it causes all kindaMrf 
damage. If my child attends 
a top school, I can tell all 
my friends and that gives 
me face,” Mr Wu - explains. - 
“The parents abdicate .their 
responsibility for raising the 
child to schools, to teachers, 
to the education system. I 
want to give the kids back 
to the family.” 

He also wants to grve stu- 
dents a no rmal teenage exis- 
tence. “We have to try to 
create an atmosphere In 
which the school is a happy 
placeand. the teacher. can be 
proud of his job,” he says; 

The hardest part of his joh 
is- that "everyone on ihe ; 
street is an expert an educa- 
tional reform. “But so far, 
I'm . having fun," be says. 
With huh the expert in oce- * 
ante atmosphere can whip : 
up a new climate . in 
Taiwan’s classrooms. 


Institution spreads its wings and its investments 

A counterpoint to 
demands has 
grown in leaps 
and bounds 

Since its blue-blooded 
beginnings in 1959 as a 
counterpoint to the commu- 
nist ideals prevailing on 
the opposite shore of the 
Taiwan Strait. China Devel- 
opment Corporation has 
grown in step with Taiwan's 

"economic miracle” to 
become the country's pre- 
mier venture capital com- 

“It was believed that 
Taiwan needed an active pri- 
vate sector in order to 
become a capitalistic society 
- that was the strategic mis- 
sion at the outset," says 
CDCs president, Benny Hu, 
who has steered the com- 
pany through impressive 
growth during his five-year 

Run by Taiwan’s ruling 




* McdiiBHUid Loag-Tcm Project Fhudij 

* Equity Invesuneat AUivitiu 

* Underwriting, Brokerage & Other Secsritici Baton! 

* Ofl&borr Banting Borinas 

* General Banking Se ra in n 





A-I + 

















Nationalist party, also 
known as the Kuomintang, 
early shareholders in 
tbe institution that was 
founded as a mini-develop- 
ment bank included the 
World Bank, Morgan Guar- 
anty, Wells Fargo Bank and 
tbe US government. With its 
finely-honed entrepreneurial 
bent, CDC now aims to 
extend its reach to become a 
leading international finan- 

Following a strategy 
of taking minority stakes in 
scares of promising compa- 
nies to diversify risks, 
CDC has helped launch 
some of Taiwan's leading 
concerns. In some sectors, 
such as petrochemicals 
in the 1970s and electronics 
starting in the 1980s, 
CDC has played an instru- 
mental role in the develop- 
ment of the industry. As of 
the end of 1996, the compa- 
ny's outstanding direct 
investments amounted to 

Now CDC awaits the 
finance ministry's nod to 
convert into Taiwan’s first 
industrial bank - akin to a 
merchant bank - expected 
later this year. Then CDC. 
currently licensed as a trust 
company, will be able to 
offer a full range of invest- 
ment banking services and 
issue debentures to raise 
low-cost funding while con- 
tinuing its successful direct 
investment business, which 
is expected to contribute 
roughly 50 per cent of profits 
this year. 

CDC already has a 
hand in a host of the coun- 
try’s biggest deals and due 
to its connections and exper- 
tise is keenly sought after by 
foreign concerns as a part- 
ner to enter the Taiwan mar- 

To name a few, GDC 
has been chosen as the 
lead manager for the privati- 
sation of Chung Hwa Tele- 


-Hao - 






Total assets (NTlmj 






Net worth fNTSm} 






Loans outstanding (NTSm) 






tavasttanents outstanding pnVD 






Guarantees outstanding (ntsoi) 






Revenues ftfSm) 






Not Income (NTSm) 






Return on assets {W 






Return on equity (96) 






•> Earning par share (NTS) 



3.89 aoi 


1992 83 84 95 88 

' I m w a mBrtscma a tdhg name He brianoa oIcmw 

■ Avnrnge ausaa and «*»r» 3 e aquty are unad In cafcaJmJng nsum on assets and rotum on oqisty 
• Data iar 1994, 1995 and 1996 bidudfl turn fund tuha 


V- • -» • ‘ '5|?\ 

.'At. ■ • .-»•••>“ 

• • • •.» V: 

com, tbe state telecommuni- 
cations monopoly, with 
Goldman Sachs as adviser. 
CDC is also the lead man- 
ager for the privatisation of 
Chinese Petroleum, the state 
oil monopoly, for which 
CSFB is adviser. The two 
companies are among 
Taiwan’s biggest state con- 
cerns and together the sales 
are expected to bring in 
roughly US$14bn to state cof- 

A team led by CDC 
recently won a bid to build a 
US$2bn business and enter- 
tainment complex in Taipei. 
CDC has teamed up with 
Japan's Shinkansen - maker 
of tbe bullet train - to bid 

against a European- backed 
consortium for a contract to 
build a US$l6bn high-speed 
rail from the northern capi- 

tal of Taipei to the southern 
port of Kaohsiung. The win- 
ner is to be announced in 

CDC spreads its invest- 
ment across industries as 
well as companies. CDC 
a 10 per cent stake in a semi- 
conductor plant under con- 
struction in a joint venture 
with China Steel, Taiwan's 
leading steel-maker, and 
Winbond, a chip-maker. It 
also paid US580m for a 14 per 
cent stake in Far Eastern 
Airlines, a domestic carrier 
in which AIG. the US Insur- 
ance concern, is also a share- 

Not content to stay 
at home, CDC is rapidly 
expanding its overseas 
investments. These stood at 
US$58m at tbe end of 
1996, accounted for nearly a 

per cent of total direct 
investments, and are expec- 
ted to nearly double to about 
US$l00m this year. 

CDC is focusing efforts 
on south-east Asia, where it 
is systematically foiling 
relationships with local part- 
ners, in order to leverage 
Taiwan's important commer- 
cial presence in those coun- 

The financial crisis that 
spread across the region 
recently has opened many 
investment opportunities, 
says Mr Hu, adding that 
CDC is actively looking at 
financial Institutions in 
Thailand, Malaysia and 

CDC took the lead in 
establishing an industrial 
park at Subic Bay in the Phi- 
lippines after the departure 


of the US military, and has 
recruited substantial Tai- 
wanese inyestmearfs. In 1996, 
CDC launched a US$ 1 55m 
fund, called Asia Corporate 
Partners Fond, with backing 
from Calpers, the state of 
California's giant r pension 
Fund, to provide long-term 
financing for industrial com- 

Officially, tbe Kuomintang 
only holds about 6 per emit 
of the company's shares, 
down from 12 par cent a few 
years ago and less thaw the " 
7.5 per cent now in the 
hands of foreign institu- 
tional investors. But four 
banks in which the govern- 
ment is the biggest share* 
holder together hold, another 
10 per cent. 

More significantly,. 
Liu Tai-ying, a close . 

Benny Hu: steering growth 

c onfid ante of President Lee 
Teng-hui and chief of the 
Kaomin tang’s business 
operations, doubles as CDCs. 

The advent of democracy 
in Taiwan over the past 
decade has led to criticism <rf- - 
the 'Nationalist’s • extensive . 
business interests, the assets, 
pf which are estimated at * 
US$3bn. CDCs links with 
the Nationalist party' have 
become as much a liability, 
as an asset, '.-and conse- 
quently the 'company tries to 
distance itself v from its ' 
Nationalist 'party back : 

“We are . different now. • 
from -what we. were in. .the- ■■ 
past We are pubficly listed, 
we have no direct govern- r • 
meat investment," Mr Hu : 
Says. '"Now. we kre rtm ■ one • 
purely commercial basis - 
the governnfent . has^. little : . 
influence over us. now - and’ . 
doesn’t __fcry„ .to - influence . us. ^ v 
either." T :'- • '■pi.*.' 








IHHAHCE • by Laura Tvsnn 



demands for diverse 

A domestic 
futures exchange 
and the lifting of 

capital controls 
. are seen as useful 

The government of Taiwan's 
dream of trardng Taipei Into 
a leading-. Asian financial - 
centre, may $eem a long way 
off but in the meantime, 
deregulation is moving for- 
ward and the country’s 
financial markets are devel- 
oping- rapidly. 

Capita! markets are being 

liberalised with the introduc- 
tion of financial instruments 
and the pledge by monetary 
authorities to lift capital 
controls by the year 2000. 

“Since 1990, Taiwan’s 
industrial structure has 
undergone a transformation 
from labour-intensive to 
technology- and capital-in- 
tensive, " says Paul Chiu, the 
finance minister, in an inter- 
view. '“For this reason the 
financing needs of busi- 
nesses have changed. They 
hot only rely on hawk loans 
how; there is strong demand 
for different sources of fund- 
ing and a need for diverse 
financial products.” 

But before capital controls 
can be completely abolished, 

a lot of Institutional reform 
is needed," says Mr Chiu. An 
ad hoc committee - made up 
of minis try of finance and 
central bank representatives, 
academics and industry 
players - will later this year 
Propose a package of finan- 
cial sector reforms similar to 
Japan's "big bang 1 ’. 

Historically Taiwan’s 
fi n a n c i al liberalisation pro- 
cess has been step-by-step, a 
strategy which critics prefer 
to call “two steps forward, 
one- step backwards!’. How- 
ever, deputy central h ank 
governor Hsu Chi a -dong 
defends this policy as appro- 
priate for Taiwan, especially 
in view of the finan cial trou- 
bles across south-east Asia 
in recent months. 

“Their financial systems 
and supervision may not be 
so good, but ours is not very 
good either," says Mr Hsu. 
“So before you can open up 
you have to strengthen your 
fin a n c ial , system. You «ian 
have to have a stable macro- 
economic policy." 

Reforms under discussion 
include allowing commercial 
banks to do investment 
banking business modelled 
along the linpg of "revised 
universal banking" in the 
UK. Under the proposed 
changes, banks would be 

Domestic banks 

Total assets Net worth 
(NTSbffltan) pfTSbWon) 

Institutions Branches 

(number) (number) 

12,675 ' 868 35 1,551 

Sauce Conma Baft ‘ 1991 (an»yg»1 tagfraUuw) 

allowed to conduct 
full-fledged securities busi- 
ness and could Issue “finan- 
cial bonds", or bank notes, 
which they are now barred 
from doing. 

This month a domestic 
futures exchange Is to be 
launched, giving companies 
the opportunity to hedge 
risks without going offshore. 
It will also open trading 
opportunities for local and 
foreign investors. 

The exchange's first prod- 
uct will be index futures 
based on the Taiwan stock 
market which follows the 
opening of stock index war- 
rants and warrants on indi- 
viduals stocks in July. In 
September, the country's 
first rating agency, a joint 
venture between Standard & 
Poor's, the US ratings com- 

pany, and Taiwanese con- 
cerns. launched its 
operations with credit 
assessments of companies in 
Taiwan's booming high-tech- 
nology sector. 

The Taiwan market suffers 
from a lack of transparency, 
says Chen Chimg-bsin. presi- 
dent of the new rating 
agency. “The pricing of 
issues is nearly the same but 
the credit quality of compa- 
nies varies greatly," he says. 
“The rating agency will help 
to provide a benchmark.” It 
should also help to increase 
the size of the market, espe- 
cially in corporate bonds. In 
1996 Taiwanese companies 
issued commercial paper 
worth NTS6 thousand mil- 
lion. The corporate bond 
market - maturities beyond 
one year - was much 

smaller, with a total of 140 
issues averaging NTS! bn. 

Another reform under con- 
sideration is to allow bills 
finance companies - impor- 
tant players in Taiwan’s 
money markets - to enter 
the securities business, mov- 
ing toward investment bank- 
ing. Now they are confined 
to underwriting and trading 
short-term papers. 

By the end of this year, a 
new category of bank - an 
industrial bank, akin to a 
merchant bank - will be 
opened for applications. 
Unlike a commercial bank, 
which is prevented from 
making direct investments 
in iion-llnancial institutions, 
an industrial bank can 
invest up to 80 per cent of its 
net worth in industrial com- 

Several prospects - includ- 
ing China Development 
Corp, the country's biggest 
venture capital company, are 
backed by the ruling Nation- 
alist party. Benny Hu, China 
Development's president, 
has been pushing for the 
change for a few years. “We 
will be able to raise cash by 
issuing banknotes, which we 
can't do now,” he says. The 
country's biggest industry 
organisation, the Chinese 
National Federation of 

Industries, has also 
expressed an interest in set- 
ting up an industrial bank. 

In 1995 the over-the- 
counter Stock market was 
restructured - effectively re- 
launched - transforming it 
from a moribund non-entity 
into a flourishing exchange 
with over 100 listed compa- 
nies. some l.5m accounts 
and very active trading. 

The central government is 
moving quickly to privatise 
state-run banks, legally 
defined as bringing state 
shares below 50 per cent. 
The plan was given a boost 
by constitutional reforms 
passed in July which will 
shrink the provincial gov- 
ernment and strip it of its 
substantial assets. 

Early next year the provin- 
cial government's “big 
three" commercial banks - 
First Commercial, Hua Nan 
and Chang Hwa - will be 
taken over by the central 
government and privatised 
along with several other 
state banks. 

“With the freezing of the 
provincial government, the 
provincial assembly gave up 
its irrational opposition to 
the privatisation of the 
banks." says Schive Chi, 
deputy chairman of the 
Council for Economic Plan- 


Paul Chhc "Worm needed” 

ning and Development, 
charged with shaping priva- 
tisation policies. 

Chien Hung-dao, president 
of state-run Hua Nan Com- 
mercial Bank, is looking for- 
ward to privatisation of his 
bank after 20 years of 
debate. “Since the govern- 
ment granted licences to 16 
new h anks in 1992, we feel 
the new banks are a threat 
to the government b anks . 
The new banks are growing 
very fast and our market 
share of loans and deposits 
is declining rapidly," he 

Privatisation will help the 

state banks become more 
efficient and responsive to 
customer needs. According 
to C C Chen, head of retail 
banking at International 
Commercial Bank of China, 
a quasi-state bank: “Corpo- 
rate banking business is 
stagnating, so the old hnnk.c 
will inevitably be dragged 
into consumer Hawking like 
the new banks. But they are 
not geared to serve the indi- 
vidual customer so it will 
take them five or 10 years to 
catch up." The government 
needs to move ahead 
quickly, otherwise, in a few 
years the state banks may 
not fetch a good sale price, 
Mr Chien says. 

Starting in 1995, Taiwan 
had 40 bank runs in two 
years. “We cannot play the 
role of fireman every day, so 
we have to restructure bank- 
ing supervision system," 
says Sean Chen, director of 
the finance ministry's 
Bureau of Monetary Affairs. 
Once draft legislation is 
approved by the national leg- 
islature, deposit insurance 
will be compulsory and 
supervision of flip manage- 
ment of financial institu- 
tions will be tighten pri. inter- 
nal controls will be 
strengthened and penalties 
for violations will be raised. 

LABOUR ■ by Laura Tyson 

How to fill 



Restrictions and 
fees drive many 
foreign workers to 
stay on the wrong 
side of the law 

Eileen came to Taiwan from 
the Philippines an a tourist 
visa 10 years ago - and 
never went back. She has. 
worked Illegally as a maid 
ever since, risking imprison- 
ment, deportation and heavy 
fines. She has even learned 
to speak Chinese.. 

“My friends who are legad 
have so much trouble, they 
have to pay the labour bro- 
kers many , thousands of dol- 
lars and they can only stay 
in Taiwan for two years,” 
she says. “Many of them go 
back to Philippines, change 
their name, get a new pass- 
port and come back to 
Taiwan because you can 
make good money here. 1 
have enough money to hoy a 
house when 1 go bade.” 

and tens- of. thou- 
sands like her are a night, 
mare for Taiwan, a homoge- 
neous society, struggling to 
come to grips with an influx 
of foreign labour in recent 
years, mainl y from Thailand, 
the Philippines, Malaysia 
and Indonesia. 

Now the government pro- 
poses to open its labour mar- 
ket to workers from Viet- 
nam, North Korea and five 
central American countries 
- partly to boost isolated 
Taipei’s diplomatic relations. 
But critics say foreign 
labour takes jobs from Tai- 
wanese and brings problems. 

Faced with rising labour 
costs and the refusal of Tai- 
wanese to do jobs considered 
dirty, dangerous and baring; 
Taiwan, began importing 
blue-collar winkers for pub- 
lic infrastructure projects, 
factory and domestic work 
in the early 1990s. 

About 800,000 work per- 
mits have been issued and 
some 250,000 foreign workers 
have come to Taiwan on 
two-year unrenewable con- 
tracts. This system has 
prompted more than 30,000 
workers to “run away” since 
iggg — that is, abandon their 
fegai employer before their 
contract is up and work else- 
where illegally. The Council 
for Labour Affairs (CLA), a 
cabinet agency, recently 
decided to allow foreign 
workers to apply to stay an 
extra year, but this is 
Tmiikelv to solve the prob- 

' Business leaders want quo- 
tas to be raised in order to 
man assembly lines and 
working families rely. on 
maids for care of children 
and the elderly, but rising 
white-collar unemployment 

coupled with fears of dis- 
ease. crime and social insta- 
bility have made foreign 
labour the subject of heated 

“We argue in favour of 
more foreign labour, but this 
is very controversial," says 
Ma Kai, an economist at the 
independent Chung Hua 
Institution for Economic 

"People in our society 
tend to think that because 
foreign workers are coming 
from less developed coun- 

tries, they will bring dis- 
eases, social problems or 
they will somehow pollute 
our culture.” He attributes 
this attitude to lingering 
Japanese influences left on 
Taiwan society from Japan's 
50 years of colonial rule over 
the island ending in 1945. 

Chang Chun-hsiung, a par- 
liamentary legislator, criti- 
cises the government’s han- 
dling of foreign labour and 
demands that it freeze 
i mparts until a- better policy 
Is formulated. "Taiwan’s 
unemployment rate is now 
at the highest level since 
1949, but the labour shortage 
is only 33 per cent, the low- 
est since Id87,” he says. 
“Even jobs that Taiwanese 
are willing to do are being 
taken away by foreigners 
because companies want to 
pay less." 

He concedes that foreign 
labour is necessary for 
Taiwan’s economic develop- 
ment, but argues that if the 
government does not come 
up with a better manage- 
ment policy now the situa- 
tion will be “total chaos" In 
five or 10 years. 

The labour cirief says be is 
concerned with the manage- 
ment of foreign workers. 
“The issue; of runaways is a 
serious problem, so we have 
imposed a penalty for 
employers of illegal workers 
of three years in prison and 
a NTS800.000 fine." says Hsu 
Cbieh-gwei, chairman of the 
CLA. The CLA plans to set 
up a database on foreign 
workers that will be con- 
nected to other government 

Mr Hsu says he has 
directed his agency to inves- 
tigate the problem of unscru- 
pulous labour brokers. 
“Those brokers charge too 
much on both sides — I bear 
fflipino workers have to pay 
T$80,000." The CLA recently 
launched a trial program 
under which two large Tai- 
wanese companies, Acer and 
Nan Ya Plastics, can recruit 
directly from Thailand and 
the Philippines, cutting out i 
the brokers. 

Another target of critics is 
the policy of applying the 
national Twiniimim wage 
(about US$525 a month, but 
in practice foreign workers 
average about US$700 a 
month) to foreign labourers. 
Opponents argue that the 
foreign workers get free 
room and board while Tai- 
wanese workers do not. “The 
pay should be determined by 
the labour market, not by 
the origin of the person,” 
says Mr Hsu. “This is the 
government's policy." 

The government now 
wants to cut back on foreign 
labour. The goal is to c ut the 
maximum per company from 
35 to 30 per cent of total 
workers and the percentage 
of foreign public infrastruc- 
ture workers from 65 per 
cent to 50 per cent But it is 
doubtful whether this goal 
will be met. 

“I think it will be very dif- 
ficult to get rid of foreign 
labour," says Mr Hsu. 
“ r Lbere js an imbalance in 
supply and demand. In 
heavy work, in construction 
there are so many vacancies, 
but not many Taiwanese 
want to take those jobs.” 

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'T ' 

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' V 

• -- 



financial times 


7 1997 


BICYCLE INDUST RY • by Peter Marsh 

Michael Tseng, president of Merida says the company may follow the lead of Giant (centre) and start a European production base. MaanwhHe, Antony Lo, president of Giant fright) says bis company Is committed to innovation 

Competitiveness propels cycle of expansion 

Merida looks 
towards Europe 
in direct 
challenge to 
leader Giant 

Merida, Taiwan's second 
biggest bicycle maker, has 
served notice that it is keen 
to follow the example of 
Giant, Taiwan's largest 
player in this industry, in 
setting up a factory in 

While Giant opened its 
plant in Lelystad in the 
Netherlands in the s umm er 
at a cost of $20m, Merida 
says it is considering the 
possibility of starting a simi- 
lar operation as part of its 
globalisation drive. The 
developments underscore 
the interest by Taiwan's bike 
producers in establishing 

overseas ventures as a logi- 
cal extension of their impres- 
sive record in exporting to 
the world's main markets. 

This year Taiwan's bike 
makers are expected to 
export some 10m machines 
worth about $lbn at factory 
prices, making Taiwan the 
world's biggest bicycle 
exporting nation. Merida and 
Giant - which both set up in 
1972 and have gone public in 
the past five years - have 
played a big part in develop- 
ing Taiwan's bike industry. 

The companies share 
many characteristics includ- 
ing being based in central 
Taiwan's industrial belt near 
Taichung. Each was started 
by a determined, mechani- 
cally-minded entrepreneur - 
Ike Tseng at Merida and 
King Liu at Giant - who 
remain respectively as chain 

Both Merida and Giant 
have expanded almost 
entirely on the basis of 
exports, and have moved 
some production offshore to 
China to take advantage of 
lower wage costs. Merida has 
had a Chinese plant since 
1990, while Giant has set up 
two plants on the mainlan d 
since 1993. 

Both have seized on the 
potential of making battery- 
powered electric bikes which 
are claimed to have the 
advantage of makin g bikes 
more practicable (for going 
up hills or covering long dis- 
tances) and more environ- 
mental! y-fri end! y. 

Merida is making 2,000 
Pedcon electric bikes this 
year and is expected to 
increase to 10,000 next year. 
Giant, meanwhile, is plan- 
ning an initial production 
run next year of 2,000 elec- 

Taiwan’s bicycle exports 




Growth Avarice 





£ ■ 


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. iw»i- 

ioro? O u e a a m c General of DuMonts, 

• Jamary-Apri 

trie bikes with a rechargea- 
ble battery capable of propel- 
ling riders some 40km under 
normal conditions, which 
will sell for $1,000 or less. 

However, there are differ- 
ences between the compa- 
nies, particularly their size. 
Merida is making some 1.1m 
bikes a year, 650,000 of them 
in Taiwan, and the rest in 
China. Its annual sales are 
some $140m. Giant is sub- 

Tatar] Bkydm Exporters' Association 

stantially bigger and is this 
year expected to make 2£m 
bicycles worth about 

Giant’s Dutch factory is 
likely to make 100.000 
marhirips this year, increas- 
ing to 500.000 by 2001. Its 
Chinese operations are this 
year expected to make 1.4m 
bikes, leaving lm to be made 
at its main plant in Taiwan. 

According to Michael 

Tseng, president of Merida 
and Ike Tseng's son, the 
company is looking at the 
possibility of following 
Giant’s lead and starting a 
European production base to 
counter difficulties the com- 
pany has in exporting from 
China to Europe because of 
the anti-dumping duties 
Imposed by the European 
Union on China-based bike 
producers. The duties push 
up prices to importers and 
rule out exports of Merida 
bikes from its Chinese plant 
to Europe, though not from 
its Taiwan production unit. 
If Europe keeps shooting us 
[through the dumping 
duties] then we may set up a 
plant there," says Mr Tseng. 

Although no decision is 
immin ent, the company has 
examined the potential of 
dies in Britain. France and 
Holland. While Giant has 

been quicker off the mark to 
develop overseas production, 
it also builds in higher mar- 
gins to its bicycle production 
by selling more under its 
own brand - a route inher- 
ently more profitable than 
selling the bikes to other 
makers who then sell under' 
their name. 

In the case of Giant. 70 per 
cent are said using its brand, 
and 30 per cent using the 
other route - known as 
“original equipment manu- 
facturing (OEM)”. For Mer- 
ida, the proportions are the 
other way around. Antony 
Lo. president of Giant, says 
this state of affairs stems 
partly from the company’s 
commitment to innovation 
and its. policy of putting 2 
per cent of its annual sales 
into engineering and design. 
The purpose ei£ this, says Mr 
Lo, is to create design fea- 

tures helping to build up. for . 
Giant a recognisable “brand 
image” particularly . in the 

high value area of sporting 
bikes where the . retail price 
ca n be up to $2,500 and 
where the company can dif- 
ferentiate its brand from 
bike makers. 

In the case of Merida, it 
has achieved -much of its 
success through- selling on 
an OEM basis' _in the US, 
where it gets 60 per cent of 
its sales. Mr Tseng : says it 
has no intention of attempt- 
ing to compete with. its OEM 
partners in the US through 
selling its own brand there. 
But in the next five years it 
will attempt _ tn-pusit op its 
proportion of branded sales 
from 30 per cent to 40 per 
cent, mainly tfretnigh'. devot- 
ing more -marketing efforts 
to ftsfrahliaHing its name in 
Europe. ’ ' J- ' ' 


: . ,r ■ - -y~y, 

' ■■■ J ■■■ ■' vi -y~:' 

Time to press for innovation 



Selling hardware 
is lucrative 
but provides little 
kudos for small 

George Hsiung has just 
returned to Taiwan after 
working in the US electron- 
ics industry for 15 years to 
set up his own computer 
parts company. Zillion 

The Hsinchu-based busi- 
ness will distribute compo- 
nents made by Taiwanese 
electronics suppliers to com- 
panies in the US and Europe. 
He says of the IT industry in 
his homeland: “Everything 
is booming and the people 
are smart. I came back 
because the potential is so 

Mr Hsiung's comments 
underline the potential for 
Taiwan’s information tech- 
nology industry, and for 
other related high-tech areas 
such as semiconductor pro- 
cessing and biotechnology 
which are showing some 
signs of success and which 
the government is anxious 
to promote to lay the ground 
for industry in the island in 
the 2lst century. 

According to Taiwanese 
government statistics, pro- 
duction from factories on the 
island of IT hardware such 
as computers, monitors, elec- 
tronic "mice" and related 
devices came to S16.4bn last 
year, with a further $7.7bn of 
goods made in China under 
the control of Taiwanese 
companies. The total produc- 
tion puts Taiwan in third 
place in the world’s IT man- 
ufacturing industry, after 
the US and Japan. 

Taiwan's biggest IT sup- 
plier is Acer, which is 
among the world's top 10 
makers of personal comput- 
ers and which this year is 
expected to have total sales 
of some S6.7bn, including 
non-computer products such 
as telecommunications hard- 
ware and integrated circuits. 

A second success story in 
Taiwan's high-tech industry 
is in semiconductor manu- 
facturing. Thanks to the 
efforts of Taiwanese chip 
makers including Taiwan 
Semiconductor (in which 
Dutch electronics company 
Philips has a stake) and 
United Microelectronics the 
island is the fourth biggest 
supplier of integrated cir- 
cuits, with only South Korea 
between it and the electron- 
ics industry giants of the US 
and Japan. Taiwan's inte- 
grated circuit production 
adds up to around $4bn a 

The island’s strong posi- 
tion in IT is due mainly to 
several hundred fairly small 
makers of computers and 

Acer's Stan Shih, Ming Chien of First International Computer and Umax's T.Y.Wu 

related products, many of 
which are barely known 

One reason for this is that 
a lot of these companies sell 
their hardware to big inter- 
national computer suppliers 
including IBM. Compaq . 
Dell and NEC which then 
market it as their own equip- 
ment without any mention 
of the name of the supplier. 

An example is First Inter- 
national Computer, a com- 
pany set up in i960 by the 
husband and wife team of 
Ming and Charlene Chien, 
and who remain as chair- 
man and president respec- 
tively. The group’s annual 
sales come to around $l.5bn, 
but of the total output some 
B0 per cent covering all the 
business's US and European 
activities, are sold via other 
computer companies. 

Another reason is that 
only a few of the Taiwanese 
IT companies, with the 
exception of businesses such 
as computer maker Acer and 

Umax Data Systems, one of 
the world's top three makers 
of scanners for digitising 
graphics and text in printing 
applications, have devoted a 
significant amount of effort 
to marketing themselves in a 
big way on the global stage. 

Stan Shih, chair man and 
chief executive of Acer and 
no shrinking violet when it 
comes to publicity, is among 
those who argue that this 
will have to change, and that 
Taiwanese companies must 
learn to market themselves 
more effectively. 

Behind the fairly low key 
image for much of Taiwan's 
information technology 
industry is also the fact that 
most Taiwanese companies 
in high-tech fields have 
mainly been regarded as 
having followed other busi- 
nesses' technology efforts, 
without much of a record in 
innovation. This, however, is 
a position that IT executives 
and government officials 
want to change. 

According to T.Y.Wu, a 
former IBM manager who is 
Umax's president. In the 
past Taiwanese companies 
have been "the fastest sec- 
onds (in key areas of tech- 
nology] taking over a part of 
the pie and becoming fat. 
Now we must seize the 
chance to play a leading role 
at the development stage." 

Kuo Yun, president of the 
government's Institute for 
Information Industries, 
which co-ordinates efforts in 
building up progress in the ' 
IT sector, says there is now a 
trend for many of the inter- 
national companies which 
buy from the island's elec- 
tronics suppliers to give 
them more responsibility for 
design - as opposed to sup- 
plying the businesses with a 

In this way, the domestic 
IT makers will naturally 
evolve their own skills in 
fields such as internet engi- 
neering and software which 
tbey can later turn into then- 

own branded products. 
According to Simon Lin. 
president of Acer’s informa- 
tion products business 
group, the company’s per- 
sonal computer arm, the 
convergence of telecomms 
products with computers 
gives Taiwan’s IT producers 
a golden chance to exploit 
new ideas in fields such as 
personal internet terminals 
which might sell ultimately 
for as little as $300. 

Another way forward is to 
encourage Japanese IT pro- 
ducers - which often control 
many key technologies con- 
cerning electronics produc- 
tion - to set up research or 
manufacturing bases in 
Taiwan so that the skills 
they have in areas such as 
new display technologies, 
"read/write” systems for 
disk drives and chip archi- 
tecture can be transferred to 
some of the Taiwanese com- 

Mr Yun says he is 
“encouraged” by the fact 
that several Japanese lead- 
ers in IT including NEC, 
Matsushita and Hitachi are 
strengthening their links 
with the island through new 
ventures in Taiwan. A fur- 
ther technique with which 
the Taiwanese government 
is trying to promote new 
technologies that may lead 
to future industrial success 
is through its support of sci- 
ence parks around the 
island. It has already set up 
the Hsinchu park near 
Taipei which is home to 221 
companies with combined 
annual output of $12bn in 
fields such as semiconduc- 
tors. electronics, telecomms 
and precision machinery. 

Next year the government 
will open a science park in 
Tainan in southern Taiwan 
which already has 42 firm 
occupants and where the 
demand from companies for 
space - which is being 
reserved for businesses in 
the fields of electronics, inte- 
grated circuits, machinery 
and agriculture related bio- 
tech - is so great that sev- 
eral potential occupiers have 
been turned away. 

To follow up these two 
parks, the government is 
now considering a third one, 
which could be built in the 
barely -industrialised eastern 
coastal belt of Taiwan 
around the beginning of next 
century - and which might 
involve private sector cash 
in putting up the initial 
development funds rather 
than relying totally on the 
taxpayer as has been the 
case with the first two parks. 
Government cash to provide 
the infrastructure for the 
Hsinchu park has come to 
about $5 00m, and similar 
spending levels are being 
considered for the T ainan 


She is known as Mxunmy to 
her European sales staff 
and renowned for the ; 
twice-weekly Bible ■••• 
meetings she holds for all 

of her 540 Taiwan-Jwised 
employees. Ca-fomtderand 
■vice dutirmaif ot Leadwell, 
one of fhelargestTaiwan t 
machine tool c ompany , 
Gladys Hu is one of the few 
women who have tntthe; . • \ 
big time in the world’s 
$40bn a year machfoeloail^ 

lndtm lry. . 

Started in l980by Ms ku ! 
along with Panicking; an. . ' 
engineer who fethe ' t ' • ' 

com p an y ’s cha i rm a n, - J 
LeadweH has grown ’ . v ’ 
quickly to annnal sales .of : 

3100m, three quarters of 

which are sold outside •* ' “ 
Taiwan.- • • 

. interviewed inker . , 
felons factory in 
Taichung, in central 
Taiwan's industrial-belt, 

MS Hn is dfea imingly frank 
about 'the '.rate of progress, 
which- will culminate next * 
year when the company is 

^ ’ are 1 ^ 1 

where Site main. . 

■cm i 7%/. 

Y amamkiMaTMk nf Japan 

Taiwan j “ 

. . . S. Off . 

I^adwefl’s :fotal i output.60 . 
l^ceh t^soldtnidra-.the 


v«.J _ _ 

~ next five to seven years. 

r;$aar industry nt'iriaWbg'/^'’ ? 

; tou^ nSsw'Je 

Gladys’ Mb acquired ,®q»»tise 
Leadwell ferand, with the 

“It’s a miracle,’* sbe says. 

Her eonnnent. Is; underlined 
by her own ladk-af: 
credentials fox- havhog - 
anything to do with the . 

■ world of machinery. . - - 
Working in Taiwan , 
setting airline tickets for . 

T^t fthawM, . 

canin', Ms-Ha was invited 
by her friend Mr Chang in . ' 

1978 to iota his dfetrOMrthHi 
company cAyurtli^ - 
machine tools made by - 

established Taiwanese/ / _____ 

man ufa ctu re r s . With some'-* fhefr own bramL tir the 
doubts, she agreed, 
professing that her lack at 
knowledge of the industry 
might even help her to ask 
iWfiMili q riP g H iyhc rtf' 

established players. ’V f 
The two later decided to 
setup LeadweQ asa..- 
-producer in itsovnri£ht /- 
making conpilter- ; ? f,-: 1 
controlled tooteto Mr : 'V?- : 

company, fo Japanese* U5f " 
snppli&sWhich seBtothe 
final CBstomariUdiig th^r^ 

own lutoBl. = ->■_ -:j 

busihest' cnaWe^aBty > 
LeadweB does not want to 

: niachme tool htdn^ry it is ' 
tin open secret th^T. 

Japan’s Mitsubishi, 

- Clncfimati Iffiacrwand 
Httrooef thetJSimport:.:;'. 
LeadweSI machined \ £ ^ 
th«tt sell them cat ml amir ' - 
:OVBn,sontefimes wtasnmBV.’; 
-minor attadhmetits. 

KraussMai „ 

machSnerywiltprovidean ' 

. imporiuio^.^sQQM^Ieg^ fori 
teadwelLfWe wantfoJfcwp r 
• gnnying so 

Chang's design, with Wb Hn - an Taiwan’s relativjsjy low^. ^ 
looking after fomnee and. . f labottr cosi&, plus th& ~‘ r 
sales. Betweenihem, they * IV company’s xepniatKm 
own just over half the ' '■'•-••• efficiency and ShnotsGtivfe^ 
company, wtth 35 -per cent ' ” ' 
owned by Taiwan-based ' 
venture cajntal'ghiqps 
which bought into LeadwdJ 
four years ago, and the rest 

of the shares held mednly ." cutters and Enkwt/- 

by employees. _ macldnlng'systeniifc . . . 

Next year's planned ; '■ " LeadWeUVniflang ; ; h ^ j ' 




Group with 
interests makes 
foray into the 
21st century 

Telecoms . is -a far cry 
from . textiles, the core 
strength of Taiwan's Far 
- E®stwn group, which ranks 
among the world’s top 
live polyester fibre produc- 
ers. Bat that has not 
deterred Douglas Hsu, the 
US-educated chairman, from 
Investing 1 nearly USSSOOm 
Just to launch a business he 
would be the first to admit 
he initially knew little 

“Since we are . mostly in 
traditional businesses, it 
was interesting for us in 
that it has made the group 
evolve into one sector that 
is a so-called 21st century 
business,” he says. Far East- 
ern has already successfully 
handled the transfer of. con- 
_ trol to the second genera- 
t Hon to become one of 
Taiwan’s most modern - 
1 and most aggressive - bnsi- 
e ness groups. 

i In a sign of the group’s 
.. ambitions, it is. bujOding a 
103-storey complex in the 
' southern port dty at Kaohs- 
iung that will be Taiwan's 
tallest Far Eastern teamed 
up with AT&T, the OS tele- 
communications concern, to 
win licences for two of eight 
mobile phone systems early 
this year and is set to 
launch the country's first 
private-sector run cellular 
phone services this year. 

“We respected specialisa- 
tion and professionalism in 
that business - which we 
are not,” Hr Hsu says. 
Despite this Far Eastern is 
regarded as the chief threat 
to Chung Hwa Telecom, the 
state-owned giant which 
until now has held a moupp- 
dy anthe domestic telecoms 
industry. The telecoms ven- 
ture - called Fareastane - 
expects to break even in two 
or three years and reach 
NTSSObn in tur no v er in less 
than 10 years, and will be 
spun off and floated on the 
stock exchange in a few 
years. : 

Taiwan has hnge pent-up 
demand, for mobile pfcnmwi 
because Chung Hwa has 
been unable to meet 
demand. Only about four 
out of ZOO Taiwanese have 
cellular phones and it is 
forecast that penetration 
could go as high as 25 per 
cent before the market 
matures. Chung Hwa’s ser- 
vice is less than Ideal, with 
spotty coverage, and unless 
that changes soon many 
existing customers my 

textiles to telecoms 

Douglas Hsu: Pm weU positioned in one of the world’s fastest-growing markets" 

Photo: Haptf SaBatn 

switch to private sector car- 
riers mice they launch ser- 

Says Mr Hsu: “This is an 
exciting new business that 
will definitely play a key 
role in the future of the 
group, because of its poten- 
tial for gro wth ." In addition 
to the .joint, venture. Far 
Eastern has set up a co-oper- 
ative research and develop- 
ment facility with AT&T, 
which Mr Hsu figures will 
give him an edge over the 

Down the road, Fareas- 
tone is eyeing possibilities 
in China but far now will 
focus on Taiwan. “We have 
to learn how to walk first,” 
Mr Hsu says. 

Venturing into terra 
incognita is nothing new for 

Mr Hsu, who studied eco- 
nomics, once worked at Citi- 
bank in New York and is an 
avid collector of contempo- 
rary paintings and Chinese 
art He says that his group - 
the fourth largest in Taiwan 
- is probably the most 
diversified. His father, Y Z 
Hsu, founded Far Eastern 
Textile in Shanghai in 1942 
and was forced to flee 
to Taiwan in the late 

The group has since 
launched what is now 
Taiwan’s biggest cement 
company with annual capac- 
ity at 6m tonnes; the conn- 
try’s biggest department 
store chain; the biggest bulk 
shipping carrier in Taiwan; 
and in 1992, a bank. Today 
the group has six listed com- 

panies, 87 affiliates and 
assets of US$14.9bn at the 
end of last year. Group pre- 
tax profits reached US$480m 
on total revenues of 

In the core textile busi- 
ness, Far Eastern is moving 
into what Mr Hsu calls “new 
textiles” - technologically 
sophisticated microfibres 
that not only look good but 
serve several functions. Fab- 
rics must now have many 
properties - snug yet com- 
fortable, breatheable, stret- 
chy and durable. 

Seventy per cent of 
production is polyester 
fibres. Far Eastern had a 
joint venture with ICI 
to make 800,000 tonnes per 
year of PTA - a raw material 
for polyester; ICI subse- 

ll UC LEAR DEBATE • by Laura Tyson 

Protests over waste disposal plan 

Government faces 
ipposition oyer 
damage of 
onvenience with 
forth Korea 

undreds of anti-nuclear 
rti vista staged a mock 
iockade - off the coast of 
orthern Taiwan late 
st month to protest a Tai- 
nnflgft plan to ship unclear 
asteto North Korea. - 
The Taiwan government 
,ce& massive opposition 
i its -Janaary deal with 
le cash-strapped Pyong- 
mg government to ship as 
och as 200,000 barrels of 
w4evel radioactive wastes 
r final disposal on the Kor- 
in peninsula. If carried out, 
<e estimated US$230m deal 
ould be the first time that 
iy country in the world has 
ported nuclear wastes for 
ial disposal 

The controversy over 
is .case, which amounts 
a marriage of convenience 
■tween a wealthy pariah 
id. an impoverished hermit, 
not limited to issues of 
lence and safety. It 
is touched off feelings of 
itionalistic pride in 
ith Taiwan and in South 
jrea, which has voiced 
rang objections to the 
ct " 

Greenpeace, the environ- 
mtal- activist group. sa 3 rs 
Ed the deal should not be 
[owed to go through 
cause it' would set a dan- 
rous precedent. "Other 
or developing countries 
raid then have an ineen- 
-e to accept nuclear wastes 
return for cash,” says Ho 
li caii, a Hong Kong-based 

Export of nuclear wastes 
not prohibited by Interna- 
inal conventions, but 
Hnber countries have 
reed upon the basic princi- 
i that wastes should 
disposed- of- in the 
intry in which they are 
jerated. “We want Taiwan 
stick to these principles” 

says Mr Ho. “If you cannot 
handle the wastes in your 
own country, you should not 
build nuclear power plants.” 

Taiwan Power (Taipower), 
the state electricity monop- 
oly which signed the con- 
tract, has been given a dead- 
line by the government of 
2002 to remove radioactive 
waste stored at a temporary 
facilit y on Orchid Island off 
Taiwan’s southern coast As 
the harbour is small, it win 
take some tune to transfer 
all the waste out 

Mr Chen Fang-hsien, direc- 
tor of Tai power’s nuclear 
backend management 
department says small and 
densely populated Taiwan is 
in a difficult position. “We 
would prefer to keep the 
waste in Taiwan, but the 
political situation here is so 
complicated,” he says. This 
has farced Taipower to pur- 
sue the option of overseas 

A nationwide search 
for a. volunteer site in 
exchange for large amounts 
of money yielded a number 
of candidates, but they all 
backed out due to commu- 
nity protests earlier this 

But to accommodate 
Future needs, a site must 
be found in Taiwan whether 
or not the North Korea deal 
is carried out. Taipower is 
now organising a m and a ta ry 
siting programme under 
which a site will be selected 
by Taipower, and the 
affected community will 
receive NTS3bn in compensa- 
tion — the «ome amount as a 
volunteer site would have 
obtained. The site must be 
chosen by February of 1398 
under the instructions of 
Taiwan's Atomic Energy 

Mr Fang is tight-lipped 
about the North Korea deal 
“By the terms. of the con- 
tract we cannot provide 
details because it is commer- 
cial information.” he says. 
But he says to build a dis- 
posal facility domestically 
will cost about the same as 

the amount Taipower has 
promised to pay North 

The Atomic Energy 
Council is reviewing Taipow- 
er’s application for an 
export licence and has 
requested further documen- 
tation. “It's still in the early 
stages,” said Hu Ching-piao, 
AEC chairman. He adds that 

the Taiwan complies with all 
international s tandar ds and 
practices even though 
Taiwan is not officially a 
member of the International 
Atomic Energy Agency. 

Taipower Is keen to pro- 
mote regional co-operation 
on the issue of nuclear waste 
processing and disposal The 
concept of concentrating 

treatment facilities Is 
intended to save money an 
waste management and 
monitoring and make the 
process safer. 

But activists object that as 
North Korea is not a mem- 
ber of the IAEA, there is no 
way to effectively inspect or 
monitor how the waste is 
being handled- 


The world's leading exporters 1996 

fluently sold its polyester 
operations to DuPont, so Far 
Eastern is now DuPont's 
Asian partner. 

Asia Cement has a 20 per 
cent market share in 
Taiwan and is expanding 
overseas, partly dne to 
obstacles at home. "Cement 
stil) has good growth poten- 
tial in Taiwan, bnt the green 
movement has hampered 
that growth - wrongfully - 
because cement is no longer 
a polluting industry dne to 
new technology,” says Hr 

The company is building 
a USS200m plant in China’s 
Jiangxi province in four 
stages, and has di str ib uti on 
and sales in Hong Kong, 
Singapore and Shanghai. 
Stiff competition from Japa- 
nese-managed department 
stores is prompting Far 
Eastern Department Store to 
double its retail floor space 
by the year 2000; the sky- 
scraper now under construc- 
tion in Kaohsiung will have 
the largest retail space of 
any store in Taiwan. 

Far Eastern will also fol- 
low market trends toward 
combined sbopping-and-lei- 
sure complexes, and plans to 
add entertainment facilities 
to its retail business. 

Shipping concern U-Mlng 
Marine Transport has 28 
ships and a capacity of 
2.5m tonnes. Now the big- 
gest bulk carrier in Taiwan 
it is adding two vessels a 
year to its fleet, and a recov- 
ery in the global shipping 
industry should help the 
bottom line. 

Far Eastern International 
Bank was founded in 1992 
when the finance ministry 
opened the sector to new 
entrants, 16, for the first 
time in decades. Ihe hank 
has grown more than 25 per 
cent since last year and 
recently listed on Taiwan's 
over-the-counter stock 

“The industry has great 
room to grow, especially in 
consumer banking,” Mr Hsn 
says. The bank plans to 
open its first overseas 
branch soon, probably in 
Hong Kong. The group also 
runs a 6000-student techni- 
cal college, a 1000-bed hospi- 
tal and many other socially- 
oriented activities. Mr Hsn 
sees substantial room for 
growth in all his businesses. 
The only limitations are 
environmental, he says. 

“Taiwan is liberalising, 
bnt is ft liberalising fast 
enough? China is opening, 
but is it opening as fast or 
as efficiently as it could? 
Aside from that, I’m really 
well positioned in one of the 
world’s fastest-growing mar- 

Ranh Country 

P 9 

1 US'. 

Total exports 


'gcriii - 

(-1 jm - 

25* (35*1 ' 

22*(30W] - 

World Store Kpowth 





sasksi 50 100 150 200 

3pmpw=. WHenoTudi Obi M oh; WnBry of FIbmm. Mmt 

ECONOMY • by Peter Marsh 

Port expansion 
fuels exports 

In just 20 years a 
trading also-ran 
has leapt up to be 
the world’s 14th 
ranked nation 

In Taiwan’s biggest port of 
Kaohsiung, the world's third 
biggest harbour for con- 
tainer traffic after Hong 
Kong and Singapore, there is 
a sense of bustle in the air. 
Container shipments to and 
from the port this year are 
likely to be slightly above 
last year's record level of 
5.1m standard crates, while 
total cargoes handled are 
likely to be around last 
year's 260m tonnes. 

The activity at Kaohsiung, 
which handles two thirds of 
Taiwan's total cargo vol- 
umes and is also an impor- 
tant port for “tranship- 
ments” involving movement 
of goods involving other 
countries, is a convenient 
bellwether for Taiwan’s 
export driven economy. 

While Kaohsiung is likely 
to benefit in the next few 
years from reduced restric- 
tions on direct transfer of 
goods between China and 
the mainland , the economy 
as a whole is benefiting from 
healthy trade growth world- 
wide plus a strong invest- 
ment upturn at home. 

Economists are looking for 
overall expansion in the 
economy of 6-7 per cent this 
year, after 5.7 per cent last 
year - a fairly modest 
growth figure by the stan- 
dards of sonth east Asia 
caused in part by a business 
chiD triggered by the missile 
firings by China in the 
straits of Taiwan as a way of 
flexing its political muscles. 

According to Jeff Toder, 
head of investment research 
at Jardine Fleming in Taipei, 
the Taiwanese economy is in 
a “competitive” state, driven 
by good performances by 
domestic industry, electron- 
ics in particular. Mr Toder is 
projecting a 7.5 per cent 
upswing in private sector 
Investment during 1997 with 
inflation staying low at 
around 2 per cent. 

Chiang Pin-kung, chair- 
man of the Council for Eco- 
nomic Planning and Devel- 
opment, a policy-making 
arm of the government, says 
a strong boost to growth 

should come from the speed- 
ing up of the state's $14bn 
Infrastructure Investment 
projects this year. 

While Mr Chiang says he 
is impressed by the continu- 
ing high level of entrepre- 
neurship shown by compa- 
nies, private sector 
economists say much of this 
will be translated into high 
export growth this year, par- 
ticularly in manufacturing 
which accounts for just 
under 40 per cent of total 
economic output 

This year exports are 
expected to rise some 8 per 
cent on last year’s $ll6bn, 
making the 1997 trade sur- 
plus on merchandise goods 
between $10bn and $15bn 
after last year’s $13.6bn 
excess. The 1996 surplus - 
the highest since 1991 - was 
the culmination of an 
impressive record by Taiwan 
in the past 20 years in which 
it has leapt from an also ran 
in the trade field to the 
world’s 14th ranked nation 
in terms of overall trade on 
merchandise goods counting 
exports and imparts. 

The government's hid to 
improve this record is 
behind the scheme at the 
state-owned Kaohsiung port 
to build eight new berths to 
enable it to receive more 
ships cm top of the 30,000 a 
year the harbour currently 
handles. For the first thru* in 
more than 40 years, some 
ships will be allowed to take 
cargo directly to and from 
China rather than routeing 
it via Hong Kong, although 
it be on a small scale, ini- 
tially, because for the 
moment only transhipments 
are allowed cm this route. 

Far more goods go from 
Taiwan to China than the 
other way around - 
Taiwan’s biggest trade sur- 
plus with any other part of 
the world is with Hong 
Kong, reflecting the flow of 
products to the mainland, 
which last year received 
$25bn more exports from 
Taiwan than it sent in the 
reverse direction. 

Along with the stream of 
products sold by Taiwan’s 
manufacturers to China has 
come a surge of investment 

in plants CXI the mainland — 
some Slbn a year of plant 
construction and purchases 
in China by Taiwanese com- 
panies has been approved by 

Taipei in the past two years 
while cumulative investment 
in the past decade is esti- 
mated to total some $18bn. 

However, the Taiwanese 
government wants to put a 
brake on much of the invest- 
ment involving high-tech 
industry - arguing tha t this 
will weaken the island struc- 
turally while giving an eco- 
nomic boost to a neighbour 
with which relations are 
unlikely to become cordial 
for some time. 

As for others of Taiwan’s 
trading partners, its links 
with the US gives the 
island's manufacturers some 
cause for satisfaction. Last 
year Taiwan had a trade sur- 
plus with the US of nearly 
$7bn, exporting to it almost 
$30bn worth of goods. For a 
country with just over 20m 
people, that seems good 
going; the European Union 
(with 15 times as many 
people) managed to export to 
the US last year just $142bn 
of products. 

But it is the trade imbal- 
ance with Japan - Taiwan's 
second biggest trading part- 
ner after the US - which 
worries Taipei policymakers. 
While exports have risen 
healthily from $9.1bn in 1991 
to $13.7bn last year, imports 
have leapt from Sl8.9bn in 
1991 to $27_5bn in 1996. 

According to Leo Tseng, 
deputy director general at 
Taiwan's board of foreign 
trade, that signifies largely a 
deficit in high tech goods 
which Taiwan has found dif- 
ficult to reduce. "We must 
take steps to bring down this 
deficit over the next decade,” 
says Mr Tseng. 

The Taiwanese economy 
seems in good shape accord- 
ing to Daniel Chen, chief 
economist at Chinatrust 
Bank in Taipei, because of 
the good industrial base in 
Taiwan and the island’s lack 
of dependence on imported 
flows of capital which in 
some other countries have 
given rise to an unsustaina- 
ble increase in hank lending. 
It also helps that much of 
Taiwanese industry is home- 
grown rather than being 
controlled by multinationals. 
The emphasis on small to 
medium-sized companies 
spread over a variety of sec- 
tors provides a “solid foun- 
dation” helping economic 
stability, says Mr Chen. 


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'rif — — 







Crowd-pleasine policies and antics 

— . - saa nf AR VtP R9E afl 

Taipei's mayor 
has upset some of 
his constituency 
but is likely to 
be re-elected 

As the first democratically 
elected mayor of Taipei. 
Mayor Chen Shui-bian has 
found himself taking on 
roles his more aloof 
appointed predecessors in 
the Taiwanese capital’s city 
hall would have balked at. 

At a youth event, he 
joined in a kid’s game - a nd 
bad 100 water balloons 
pelted at him in the space of 
three minutes. At a city- 
sponsored evening of out- 
door entertainment, he 
t e am e d up with local celebri- 
ties to croon pop songs on 
stage. For the occasion, he 
donned a Superman outfit, 
wore make-up to resemble 
US singer Michael Jackson, 
and added a neon halo - a 
local touch spoofing an 
arrested Taiwanese cult 
leader who claimed mystical 

“I was elected by the 
people of Taipei so 1 feel 
very close to them," says Mr 
Chen, who is one of 
Taiwan’s most popular and 
charismatic political figures 
and regarded as a leading 
presidential contender. 
“Young people love to play 
and dress up tn costumes, so 
I am happy to oblige - in 
fact, 1 can do it even better 
than they can! " 

Crowd-pleasing photo-op- 
portunities and an unusual 
sense of humour are not the 
only hallmarks of Mr Chen’s 
administration however. The 
ebullient mayor has 
launched many - initially at 
least - controversial cam- 
paigns during his tenure 
which started in 1994. 

TO relieve snarled traffic, 
shortly after taking office he 
began strenuously enforcing 
parking laws previously 
flouted more often than 
obeyed - and stood his 
ground when powerful politi- 
cians complained that their 
cars had been towed. 

Mr Chen also closed down 
the capital's ubiquitous 
pachinko and video game 
parlours, blamed for corrupt- 
ing youth and encouraging 

gambling - and refused to 
back down when thousands 
of operators took to the 
streets in protest He put in 
place bus-only lanes on main 
streets, prompting an outcry 
from the city’s taxi driven. . 

To build a much-needed 
park in congested Taipei, he 
cleared squatters off govern- 
ment land amid howls of 
protest. Recently he shut 
down Taipei’s thriving sex 
industry, a move protested 
not only by ladies in the pro- 
fession but also - less pre- 
dictably - women's rights 

“I can only say that the 
mayorship of Taipei is an 
inhuman job, but somebody 
has to do it," he says. For 
the most part, people feel he 
has improved life in the city, 
and it seems likely he will be 
re-elected in December. 

But, his path to the 
national political spotlight 
has been arduous and 
marked by personal tragedy. 
He entered politics at a time 
when the country was under 
military rule of stron gman 
Chiang Ching-kuo, son of 
Generalissimo Chiang Kai- 
shek, who fled with his 
Nationalist armies to 
Taiwan after suffering defeat 
at the hands of Mao 
Zedong's communist forces. 

Until 1987, when martial 
law was lifted and demo- 
cratic reforms were set in 
motion, one risked imprison- 
ment or worse for advoca- ‘ 
ting democracy or Taiwan- 
ese independence. 

In December 1979. the lead- 
ers of Taiwan’s underground 
opposition movement were 
arrested after organising an 
illegal demonstration for 
democracy in the streets of 
Kaohsiung, Taiwan's second 
biggest city, and charged 
with insurrection. Mr Chen 
was asked to defend them. 

“At that time I never in 
my wildest dreams would 
have thought that I would 
become a defence lawyer for 
these democracy activists. I 
was not yet 30 years old and 
just a young lawyer doing 
marine commercial law; I 
had never come across a 
political or even a criminal 

“So when I was asked in 
1980 to defend the eight 
accused in a military trial. I 

OtdTnpei has changed under Taipei's mayor Chen Shui-bian whose antics have also captured the imaginatfon of many younger cftfrens 

felt honoured and proud to 
defend these leaders of a 
generation of democracy 
supporters. But at the same 
time I was afraid, because 
this was the era of martial 
law and nobody else dared to 
go near this case." he says. 

“Just as 1 was wavering, I 
called home to my wife and 
she encouraged me, saying: 
‘You know perfectly well 
these people are not trying 
to overthrow the govern- 
ment; they are only fighting 
for their political Ideals. If 
you don't have the courage 
to take on this case, your 
career as a lawyer is mean- 
ingless.' So I accepted the 
case, and that decision 
changed my life." 

But sadly, it was Mr 
Chen’s wile, Wu Shu-chen, 

who paid the highest price 
for that choice. A few years 
later, before hundreds of wit- 
nesses. she was run down 
twice in quick succession by 
a hit-and-run driver in an 
accident believed to be politi- 
cally motivated. She was left 
paralysed and confined to a 
wheelchair, but her injuries 
have not stopped her from 
supporting her husband’s 
cause. When be was arrested 
for frying to organise a polit- 
ical party and thrown in jail 
for nine months in 1996. she 
ran for his seat on the Taipei 
city council - and won. 

Mr Chen credits the people 
he defended as the inspira- 
tion behind his political 
career. Before the Kaohsiung 
trial. Mr Chen knew little 
about Taiwanese politics and 

still less about the under- 
ground movement for 
democracy and indepen- 
dence both in Taiwan and 

"Although they were not 
guilty, they were given 
heavy prison sentences, 
going against everything I 
had studied about legal pre- 
cepts. The willingness of 
these people to sacrifice 
their freedom and go to jail, 
to leave their families 
behind to live in exile, to 
risk their lives for their 
beliefs - this made a huge 
impression on me. Gradually 
1 began to share their goals, 
and joined the movement to 
bring Taiwan down the road 
of democracy and indepen- 

The Democratic Progres- 

sive -party (DPP), now 
Taiwan’s leading opposition, 
was established in 1996 - 
illegally as the one-party 
state did not end until 1967. 
Mr Chen was in prison at the 
time but he went on to make 
his name as a sharp-tongued 
national legislator for the 
DPP, ferreting out corrup- 
tion in the government and 
in the military. 

The mayor refuses to say 
whether he will run for the 
presidency in the 2000 elec- 
tions. only the second pres- 
idential polls to be held by 
universal suffrage. 

“In Taiwan, a lot can hap- 
pen in two years,” he says. If 
be does run for the presi- 
dency. he will be a strong 
contender. If he decides not 
to, al the relatively tender 

age of 46 he can afford to 
wait until next time r when 
iris position is likely, to be 
even stranger. 

The biggest challenge, he. 
will have to come to grips 
with if he eventually 

becomes president - as 
many in Taiwan believe may 
happen - is China. “Cross- 
strait relations is the . most 
critical problem Taiwan 
feces, and it will be the most 
serious headache for who- 
ever is presidents" he 

“The issue is crucial to 
Taiwan’s dignity, security 
and development. Taiwan 
wants to have a seat in inter- 
national society and hopes 
to actively participate in 
In tpmatinnal organisations. 
If relations with . China are 
properly handled, then there 
•wffl be a greater chance of 
achieving that goal" 

“Taiwan's economy and 
trade needs room to con-, 
tinue to develop, Taiwanese 
people want to have a better 
life and cross-strait relations 
is part of that If not handled 
well, it could destroy fifty 
years of progress. It is 
unavoidable - we need to 
establish contacts and com- 
munication with nhina, and 
to resolve misunderstand- 
ing," he says. 

“But Taiwan's future is 
not for the communist party 
of China to decide, nor Is it 
for the three political parties 
here to decide, but for the 
21 -5m Taiwanese to: make a 
final decision v' through 
national- referendum. 
Taiwan’s future is In the 
hands of the Taiwanese 

Taiwan’s constitution does . 
not provide for referendums, 
but Mr Chen and his party 
are working to include such 
a law. Over the decade since 
political reforms began, pub-: 
lie support' for independence 
has gradually risen. Support ’ 
for the status quo - de facto 
independence — vastly out- 
weighs support for unifica- 
tion with China, which 
regards Taiwan as a rebel 
Chinese provmreseventuaDy 
to be recovered. Someday Mr 
Chen may find - himself 
defending Taiwan, just as he 
once defended "democracy 
leaders under Taiwan’s mar- 
tial law era. ' 

In search 
of a 



Continued from pegs I 

controls the key Taipei may- , 
ershlp «sd . the most tmpo|> 
fent . counties comptisteg - ■ ■■' 
.more than half 1 of Tthe.:' ; 
island's nearly 22 m popS&a-' ^ 
turn./' • ■■■■' ! : v - 

Taiwan is poised tor «M" r: <'.V • 
ttomic expansion following •- 
the forging of a broad pottff-':;... 
cal consensus . which , tarn ... 
paved the way for 7 ’ i 

tiem of the economy. -; V V- 
• A- vast array of State-. ; : 
tag state 

‘ crown = Jewels - the state 
telecommunications, power . 1 , 
and petruteum monopoti*— - 
are- to be privatised. The’ : ■ • 
prbceeds : from sefl-offt • 
expected to boost g oyerit. , 

; meat coffers to the 
gSbnto J7tai per year for the ' . 

next five years. • V.. . • 

- Liberalisation w$jjl also' ; 
open- up many- business- 
opportunities fbr '• pittite’ 
sector companies, domestic: - - 
as well as foreign in key sec- 
tors. They will, also help . ; 
Taiwan's accession 
World Trade Organisation, 
for which bilateral negotia-' '• 
tarns- with trading partners ^ • ' 
are nearly completed. V u 
There is m understandfr^ 
that Taiwan will .jnte-flwf*sv/ ; 
WTO only after China, 
the main : o bsta cl e ; to v : ' 
Taiwan’* entry is j. . 

China's market refonmEtoi l : 

the financial sector; 'a, - 
futures exchange will : 6 e-_V 
established in October. -1997'. • .. - - 
following the relaunch qf ' : 
the over-the-counter stock,, r 
exchange in 1996. •: .-■* _ . 

By the .end of this year; 
new categury of bank - afrC- ^ - .v. 
industrial t ank; *ktn to ag-vv : - 
merchant hank — will ' 

opened for appHcattoni^v;- 
Capitil markets are beiag^ - 
Iiberalised with new finan- ’ 
rial instruments, while mon- ' •'*. 
etary authorities • have -' 
pledged to lift capital coat- J ' -; 
trols in the year 2000. If all 
goes as planned, “G etttag to 
Know Taiwan" may have to - 
be revised after another ; 
decade ' or so - because 
Taiwan could be a very dif- - 
fereut place from today: - : 


I pjfMI ’ 

CHINA STEEL • by Peter Marsh 

Spreading from the core 

Stepping into new 
commercial areas 
is vital for 

operators in a 
cyclical business 


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For a business executive 
attempting to cany out one 
of the most sweeping diver- 
sification programmes in 
Taiwanese industry, Wang 
Chong-yu has a studiedly 
unremarkable background. 
A chemical engineer by 
training, he joined China 
Steel, Taiwan's formerly 
state-owned steelmaker, tn 
1972 and initially worked on 
construction of coke storage 
vessels, later rising to the 
giddy heights of a superin- 
tendent in the iron-making 

Four years ago, Mr Wang 
took over as chairman of the 
company, after a spell in 
government helping to push 
through its privatisation 

With tiie, state’s share in 
China Steel already cut two 
years ago from more than 70 
per cent to less than half, 
the company already has the 
reputation of one of the 
world’s most profitable and 
efficient steelmakers. It is 
now embarking on a fresh 
period of change in which it 
will seek to expand its inter- 
ests in fields as removed as 
aluminium production and 
Tunning railways and tele- 
coms projects. 

Under the company’s 
plans, it will increase group 
annual sales from NT$l07bn 
in the year to this June to 
NT$150bn by 2000, with 
much of this growth 
accounted for by plans to 
expand outside its core 
steelmaking activities which 
provided NTS 88 bn worth of 
sales last year. 

I Among the businesses 
that the company is in 
already are silicon wafer 
prodnetion for micro-elec- 
tronics (in a venture jointly 
ran with the German chemi- 
cal company HUls); shipping 
and trading; and security 
systems for offices and fac- 
tories. The company also 
has an operation which 
makes heavy steel struc- 
tures for the building indus- 
try, and refines some of the 
generally unwanted by-prod- 
ucts of steelmaking to pro- 
duce cement. 

Mr Wang says he is 
also attracted by the idea 
of buying into other 

This venture, in which . 
China Steel lias a 30 per' 
cant stake, and in which the. 
other partners : axe Ku*t 
Hong, a- smaller private j.- 
steel company, and various: . 
government ^investment V 
funds, should start neat' 


Wang Chung-ytr. engineering sweeping tfirorsificaflon - uvmmi 

operations from mining 
coke and iron ore in places 
as far afield as Brazil and 
Australia, and running or 
making roiling .stock for 
railways. China Steel also 
has a venture capital fond 
to invest in. new industries 
whieh are run, by outside 

Asked whether this spread 
of interests might mean 
China Steel strays into 
activities beyond Ms sphere 
of competence, Mr Wang 
looks somewhat pained. .'He 
insists there Is logic behind 
all the moves - “my logic" 
as he puts it 

He says other businesses - 
such as some of the big Jap- 
anese steelmakers - which 
in the past have gone off 
into ill-advised diversifica- 
tion moves have simply not 
done their homework. 
“Other companies have 
made their moves not in an 
economic way. We will go 
into new businesses only 
after a careful study which 
proves they are feasible." 

The a r gum ent for s tep pin g 
out into new commercial 
areas, says Mr Wang, is the 
hard fact that steel is a 
cyclical business. While the 
sector is, at least in the 
south-east Asia region, 
going through something of 
a boom, this cannot be 
expected to last indefinitely. 
So the diversification should 
protect the gr oup from the 
economic distortions caused 
by a future downturn, and 
keep profits reasonably sta- 

Bight now, Mr Wang. and 
his colleagues do not have 

much to worry about in 
terms of income. Last year 
the core steel activities of 
the group returned pre-tax 
income of NT$17.2bn, a 
profit margin on sales of 
19.5 per cent. That is a 
ret u rn that steelmakers In 
Europe can only .dream 
about, as a result of weak 
economic demand depress- 
ing prices. 

The secret of the high 
profitability, according to 
Tsou Jo-chi, China Steel's 
vice president .in charge of 
commercial operations, is 
tiie company's highly mod- 
ern plant, plus its location 
next to the port of Kadis-, 
iung in southern Taiwan 
which makes shipping of 
raw materials and finished 
products relatively easy. 

The impressive steel plant 
has been constructed in the 
past 20 years - its produc- 
tivity levels' are among the 
highest in tiie world steel 

The plant is ™wng about 
&5m frames of finished steel 
a year and, with some extra 
investment, can' be expected 
to turn out between 9m and - 
10 m tonnes annually by the 
end of the century- But after 
thsi, space considerations 
sd Kaohsiung mean no mure 
expansion will be possible. • 

With this in mind, the 
company Is planning several 
projects within its core 
steelmaking activities.. 
Already under way Is a 
NTS30bn investment by 
China Steel in a new steel- •' 
making business called Hhel 
Y1 Industrial at a site in Tai- 
chung in central Taiwan. 

year., - ,■ _ 

By about 2002. it sbonM -’ . 
be making some 3m tonnes / 

- of finished sled a’ year. 
- . involving China Steel tak-' .' 
tag a one-third stake in s- 
new coULrbOed steel product - / 
tion operation with local - 
partners and which will - 
have a capacity of- 300,000 
tonnes of steel a year. 

Furthermore, Mr Wang . 
-says the company is talking ; 
to other groups in south- ^ V-.’, 
east Asia about joint ven- r . - 
tores, particularly ta Malay-' 
sia and Indonesia, which 
could involve Inve st me nt of 
several billiniLnew Taiwan- 
ese dollars in projects tern- ; . ' _r 
tag oat several, million uf-y' 
tonnes of steel annually. _ - 

With, steel .demand' 
expanding in tiie south east . . 
Asia region, (which is where . : ; » 
most of China Steel's pro- ; - ; 

duction ends up, the Taiwan- 
market alone .taking about 
three quarters of Its output . .." 
and Japan tektag I 2 per W 
cent) at about 5 per cent a ;,' .. ; - 
year, such investment. " \ " 

schemes look reasonably . •* • .. 
certain' to make' good ' ^ ' 
returns ta the short tum -* 
so long as the region does."'. ^ 
not see a glut ta capacity or 
a downturn ta demand 'dim 
to economic shocks. .. ' 

As for the other ventrires - ^ - - 
outslde . the steel activities, ; "V ; 
Chiaa Steel h«i high hopes 
especially tar its atamtatam.^ 
production pperatiosis, from^ 
which annual, revenues • -* S- * 
should double from JTDpami , ' 
wfthln .three years, and fts . 

Taisil electronics', msterifibr. V.-. ; ■ 
venture with Hfiiis which ; 
has become the first pro-' - .- 

dneer in. Taiwan of the latest 
eight-inch silicon. '’wafers' 
suitable '. for ' modern inte^r’ ^ " : : % 
grated circuit man uf actixp- '.-- v 
tag.-:- :• • 1 '- 

The investments including ^ • - Sv : 
steel projects should total, '' ; -- ? ; 
around. NTStobn a year over:' 
toe next few years, accord- ■?: 
tag to Mr . Chang; and' torn : 

the company by early next;.-'" 
century into his vision oT j 
the “company of tiie I ht to y .-., ~3lv'- -3 
" * based: .-V '■&£; 

of taddstrial materials bnt-^P 

tr0, »«d by strat^lc taydet- 
meats in new burifreisR 1 ^ 
areHS. -• • ' ' r .c. . 

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Tuesday October 7 199' 


Specialists are increasing their share of 
Europe s $130bn logistics market but, 
reports Charles Batchelor, they must maVp 
allies of IT and the environment to progress 

Moves in the 
right direction 

Comp etitive pressures are 
forcing companies to look at 
a wide range of measures to 
squeeze costs out of the 
manufacturing and sales 
process. This search for 
savings in the corporate sup- 
ply chain - from the order- 
ing of materials to delivery 
to the final customers - is 
creating new opportunities 
for the logistics 

Third party logistics - the 
part of thafr business which 
companies are prepared to 
contract out to suppliers - is 
still much amaUm- than the 
amount companies keep 
in-house. But as manufactur- 
ers and retailers redefine 
what they consider to be 
their core areas of compe- 
tence they are proving will- 
ing to hand over larger parts 
of their operations to outsid- 

In Europe this has created 
a $l30bn industry - erf which 
$31.6bn is contracted out 
according to researchers 
Marketline International - 
where a variety of players, 
from t raditional hanitor c and 
freight forwarders through 
logistics specialists to com- 

puter software houses are all 
battling for a share of the 

Although many markets, 
particularly in southern 
Europe, are only starting to 
be developed, in some indus- 
try sectors in northern 
Europe, there is fierce com- 
petition. "UK r etailing is as 
developed as it can be and 
margins are under pres- 
sure," says Edward Rod- 
erick, chief executive of dis- 
tribution specialists 
Christian Salvesen. “But 
there are areas such as 
Industry, consumer and food 
manufacturing where we see 

A process of consolidation 
among the larger players is 
making it more difficult far 
new entrants to break In. 
“Ten years ago you would 
find 15 or 20 bidders on the 
tender list for a con tract," 
says John Harvey, chairman 
and chief executive of Tjb- 
bett & Britten. "But now you 
have to already work for 
good people to get on a list 
and most only run to three 
or four names." 

In the more competitive 
markets logistics providers 

are increasingly tur ning to 
information technology as a 
means of distinguishing 
their services from those of 
their rivals. “There is over- 
capacity In the European 
- haulage market so the trans- 
port side is not attractive," 
says Mr Harvey. “The future 
of this industry is all about 
added value.” 

There is strong demand 
from manufacturers and 
retailers for systems which 
allow them to follow the 
'progress of materials and 
components through their 
factories and to “track and 
trace" their progress while 
inbound from suppliers and 
outbound to customers. 

“Customers are looking for 
Increased amounts of infor- 
mation," says Barry New, 
director of P&O Nedlloyd 
Global Logistics. “There is 
Increased use of electronic 
data interchange via the 
Internet to provide visibility 
on consignments.” 

Penske Logistics, a US- 
owned newcomer to the 
European logistics market 
sets great stare by informa- 
tion technology as a basis 
for its entry into the market 
Brian Bolam, president of 
Penske Logistics Europe, 
sees the potential for greater 
application of IT to the 
scheduling of products 
through a company’s supply 
chain and to providing man- 
agers with information on 
the progress of orders going 
through the system as well 
as to traditional areas such 
as vehicle management 

He also has plans for an 
Internet-based transport 
futures exchange which 
would allow shippers to 

PHOTOctm Sorcff MarkatiJn* frrfr mg flo n* 

cover or hedge their future 
requirements while hauliers 
could plan ahead to fill their 
surplus capacity. 

Some firms are applying 
sophisticated technology to 
their logistics planning but 
the majority are not m aking 
the most of available 

“Many companies don't 
plan their transport require- 
ments more than one day 
ahead," Mr Bolam says. 
“Because they don't plan 
ahead shippers end up pay- 
ing top dollar while hauliers 
are unable to fill their back- 

A long-standing complaint 
of manufacturers and retail- 
ers is that there are no logis- 
tics groups which can meet 
their requirements from a 
single source on either a 
continental or global 

This has triggered a wave 
of takeovers throughout 
Europe although the disap- 
pointing outcome of some 
cross-border acquisitions has 
persuaded many logistics 
groups to concentrate on 
organic growth. 

Companies which have 
pursued an active acquisi- 
tions policy Include Tibbitt 
& Britten which has this 
year acquired a privately 
owned warehousing and dis- 
tribution business In South 
Africa as well as Applied 
Distribution, a listed UK 
logistics company. 

Meanwhile Hays, a logis- 
tics and business services 
group, bought the French 
and Benelux-based distribu- 
tion businesses of the Aus- 
tralian Mayne Nickless 

In continental Europe 
BTL, a Swedish group. 

acquired a German air 
freight company, Bailauf 
Air, and established a sub- 
sidiary in Ukraine. Danzas, a 
Swiss-based freight for- 
warder and logistics com- 
pany, announced plans to 
strengthen links with 
agency partners in Sweden, 
Denmark and Norway and 
the acquisition of a distribu- 
tion business in Finland. 

Some of the main UK 
groups have been reorganis- 
ing their businesses to focus 
on logistics. Salvesen 
responded to a hostile take- 
over approach from Hays by 
floating Aggreko, its power 
generation equipment rental 
division: Ocean Group dis- 
posed of its offshore support 
services business, OIL; while 
PAO and Nedlloyd bundled 
their logistics operations 
together into P&O Nedlloyd 
Global Logistics. 

Penske Logistics, a joint 
venture by GE Capital and 
Penske Corporation, a pri- 
vately owned US group with 
haulage and distribution 
interests, is attempting to 
establish a - Europe-wide 
logistics operation by a com- 
bination of acquisition and 
organic growth. \ 

Established rivals doubt 
whether the market is large 
enough to absorb a signifi- 
cant new player but Mr 
Bolam believes he can break 
in by offering customers con- 
siderable cost savings. 

“If we take the whole sup- 
ply chain we can compress 
time dramatically and 
reduce costs by 25-50 per 
cent,” he forecasts. 

Penske has established its 
European headquarters in 
the UK although Mr Bolam 
says the company does not 
want any single country to 

dominate its pattern of busi- 
ness. Nevertheless the UK 
has provided a favourable 

climate for the development 

of pan-European logistics 

The early deregulation of 
the road haulage industry - a 
process still to be completed 
in markets such as Germany 
- and the relatively high cost 
of storage and retailing 
space has encouraged the 
development of flexible 
delivery patterns in the UK. 
The growth of large super- 
market groups has also 
forced the previously frag- 
mented haulage and ware- 
housing sectors to modern- 
ise. Restrictions intended to 
protect the small shopkeeper 
have held back similar devel- 
opments in France and Ger- 

A potential weakness of 
the UK groups Is their 
domestic reliance on road 
haulage at a time when envi- 
ronmental pressures and 
growing congestion on 
Europe’s motorways Is forc- 
ing a look at other modes, 
inrinriing rail. 

However sophisticated the 
systems for tracking con- 
signments become, if deliv- 
eries cannot be made within 
a reasonable time because of 
traffic density, costs will rise 
and business efficiency will 
fall off. 

The European Commission 
and individual governments 
are attempting to find solu- 
tions to the threatened 
transport gridlock but prog- 
ress is slow. 

The European Union’s 
Ecu350bn programme of 
trans-European networks, 
intended to promote strate- 
gic road, r ail and air links, 
has been held hack by a 
shortage of funds. However, 
this has not prevented the 
Commission from drawing 
UP ambitiOUS plane tO «rtwiri 
these links into eastern 

Attempts to de-regulate 
Europe’s railways and intro- 
duce a more commercial 
approach are advancing 
slowly though there are 
hopes that the first of a net- 
work of dedicated freight 
freeways can be established 
from next year. 

In the short-term the grow- 
ing difficulties of maintain- 
ing transport links will cre- 
ate a damand for the skills of 

the logistics industry. In the 
longer term, however, a fun- 
damental solution must be 
found to the problem of con- 

EUROPE • by Michael Terry 

he con No pan-Europe panacea 

* * - y.tfl 

: ■" , 


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across Europe are 
seeking logistics 
services to match 

In the past, UK chemicals 
conglomerate Id has organ- 
ised its European logistics 
activities on a business by 
business basis. -Now, under 
the code name Symphony, 
the company is installing a 
centralised system of pro- 
curement, and control of the 
third-party organisations 
that provide it with its logis- 
tics services. 

Id's move has implica- 
tions beyond the group. It Is 
one erf a growing number of 
multi-national companies 
that are completing the 

rationalisation of their Euro- 
pean operating base and are. 
now seeking a pan-European 
logistics solution to match. 

The problem, is that even 
though the European, logis- 
tics-industry has for 10 years 
been talking about the need 
to set up pan-European ser- 
vices, no operator with the 
ability to provide such a ser- 
vice yet exists.' And the con- 
sensus is that the risk and 
investment involved in 
establishing such a venture 
makes it highly unlikely 
that there will ever be any 
such operator. 

Painful lessons have been 
learnt from the early 1990s, 
when UK companies such as 
Christian Salvesen, Exel 
Logistics and Lep Swift, 
buoyed by a self-belief in 
British excellence in logis- 
tics awitar invested heavily 
in a string of national com- 
panies across mainland 
Europe only to • catch a 
rather nasty cold. 

Their plans to group these 
acquisitions into pan-Euro- 
pean logistics networks 
proved overly ambitious 
because the multi-national 
customers,' on whose busi- 
ness they were depending, 
were significantly sl owe r 
than expected in completing 
their European rationalisa- 
tion programmes. • - 
As a result, the . revenue 
the service provid ers were 
depending on to justify th eir 

investments was not forth- 
coming and they have had to 
refashion their strategies. 

By centralising its distribu- 
tion procurement Id is seek- 
ing to cut -the- -cost of Its 
European* operations by 
improving efficiency, 

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increasing its buying power 
and <ri gniflf-antiy cutting the 
number of its European 
third-party service providers. 

Thera are. however, limits 
to how far they can - go 
according to Phil Browitt, ■ 
the company's distribution 
services manager 
: "There is nobody who' can 
-do the whole of our business • 
cm a pan-European basis so > 
the industry is responding to : 
us by forming a number of ■ 
alliance s. Two or three of 
them get together to give: 

themselves the geographical. 

coverage they need to han- 
dle a big tender. 

"I don’t believe any. one 
Operator will become totally 
pan-European across all 
modes, if it ever happens it 
could involve a forwarder or 
distribution contractor with 
supply chain management 
skills and a' strong IT capa= 
hflity. who will buy-in the 
services it can't itself pro- 
vide and manage the whole 
thing as a virtual operation/ 

The demand for wider 
European distribution 
undoubtedly exists, accord- 
ing to Charles Rice, head of 
European distribution opera- 
tor P&O Trans European. 

. -Multinationals from the 
automotive, petrochemicals, 
electrical goods and paper 
industries are lead i n g a 
move towards moraEuro- 
pean forms of distribution. 
Not many are trying tq cover 
the whole of Europe through 
one. carrier but some are 
reviewing their previous, 
more national, systems and 
converting them step by step 
into a distribution system 
that win be organised across 

' Europe by two or three main 
service providers." 

P&O has been working 
, towards this situation since 
. 1989 when It made its first 
European acquisition, the 
German transport group 
Rhenania. Although the ini- 
tiative suffered initial grow- 
ing pains, it has subse- 
quently developed into an 
£S83m a year business 
through a combination of 
further acquisitions and 
organic growth, focusing 
mainly on northern, central 
and eastern Europe. Italy, 
S pam and southern France 
are covered by exclusive 
partnership arrangements 
with one company in each 

Currently, the company 
carries out just-in-time 
national and cross-border 
co r tec tiptt” ar| d deliveries of 
components and spate parts 
for motor manufacturers 
Fiat, Ford, Mercedes Benz, 
Opel and Volvo as well as for. 
tractor manufacturer New 
Holland. And this month it 
is set to oversee the con- 
struction of a rail-linked, 
automated, high-bay, Euro- 
pean, distribution centre for. 
a German fine paper pro- 
ducer near Cologne. When 
the facility is complete it 
will manage the company’s 
European flows of raw mate- 
rials and finished products. 

Meanwhile, western manu- 
facturers and retailers are 
still coming to terms with 
the shortcomings of logistics 
services provision within 
Eastern Europe. 

The main distribution 
activity in the area is impart 
and export traffic. Western 

service providers are trick- 
ling in to the region ' in 
response to client demand 
from retail groups such as 
Tesco of the UK and Ahold 
of the Netherlands as well as 
fast moving nnnmmw goods’ 
(£mcg) manufacturers such 
as Unilever and Colgate Pal- 
molive who require a service 
within the region. 

Nevertheless, US soft 
drinks and snack food manu- 
facturer PepsiCo’s frustra- 
tion at being unable to find a 
domestic distribution opera- 
tor in Hungary which can 
perform to the western stan- 
dards it requires is not 

Pepsi says the choice is 
between local suppliers that 
are cheap but unreliable or 
western newcomers who do 
not yet have the economies 
of scale to make tbeir 
charges economic. 

A recent report by BOC 
Distribution confirms that 
domestic operators within j 
centra] and eastern Europe I 
are undercutting foreign 
operators because their costs 
are lower. Wages in the 
region account for about 11 
per cent of costs compared 
with 25-30 per cent in the 

But BOC warns that 
increasing competition on 
price raises serious issues as 
it is forcing smaller hauliers 
. to reduce overheads further, 
raising concerns about 
safety and environmental 

. In. spite of such fears, Uni- 
levdfr, which has opened a 
personal care products fac- 
tory. in St Petersburg, Rus- 
sia, says it will persevere 
with efforts to bring the 
local operators up to western 
- standards. 

" Frank Braeken, a senior 
vice president in Unilever's 
central and eastern Euro- 
pean division, says; "There 
are some pockets of excel- 
lence among the locals. HZ, 
a small Dutch operator who 
took the risk to provide our 
chilled domestic transport 
locally, is now developing 
into warehousing and distri- 

; "We also have our own 
expertise because we had to 
do -some warehousing our- 
selves so we have an estab- 
lished logistics system. It 
may not be perfect but the 
large western operators who 
were initially reluctant to 
put money in these countries 
will have to work very hard 
to get a contract with us." ■ 

1 v'V- 

* 4 • . 

Introducing a new company with 178 years of experience. 

ter inheriting 170 years of experience in the port diversified areas of growth. And take us from operati 

After inheriting 170 years of experience in the port 
business, PSA is now a corporation. This Is highlighted 
by our new corporate logo - a globe encircled by waves 
symbolising PSA's global standing as well as the global 
reach of its operations. But our corporatisation goes 
beyond a mere change in logo. More important, it 
signals a new business direction. One that will move 
us closer to our customers and increasingly into 

diversified areas of growth. And take us from operating 
a world-class port to managing a worldwide network 
of ports, logistics and related businesses. There is, 
however, one thing that will always remain the same - 
Our award-winning service. 

At PSA Corporation, Fiat's 

something we wouldn't mT (»/i 

change in a million years. The World’s ftorr of Coll 

Jb finfl on non m eon m ct Serve# to you. wfitf our mbato, Wtp^Wwwjtaiooni sfl. ft unto to PSA Coponoon Lai. oo Q»pt»aB OMmintcaUmDeDarmmi. 

an Suffix PSfl Butkbng. 4SO Almnora Road. Sfigopon I I09BS. 

V — - " 

- - - '-•.•^T , 9®r; V,'^;:.;;,: .?i.V • 

ENVIRONMENT • by Michael Terry 

Green grocers 
lead the way 

Bigger loads and 
fewer miles will 
save money and 

David Smith, bead of 
primary distribution at the 
Tesco supermarket chain, 
last month called on his 
competitors to join with him 
in a groceries delivery 
scheme that could, within 
the next three years, save 
3m lorry miles a year and 
cut CO, emissions by 4,600 
tonnes a year. 

Tbe call comes at a time 
wben public interest in tbe 
environmental impact oF 
freight transport has been 
heightened by the launch of 
a government consultation 
paper on its proposed inte- 
grated transport policy and 
the publication by the Royal 
Commission on Environmen- 
tal Pollution of its latest 
report on transport and the 

The environmental com- 
mission's report, which rec- 
ommends the imposition of a 
permit (vignette) scheme for 
heavy lorries using motor- 
ways. criticises freight trans- 
port for the distances over 
which goods are moved by 
road and suggests that its 
impact can in part be 
reduced through better 
transport pl anning . 

Mr Smith's call was made 
during a seminar on a study 
of a Tesco scheme which 
seeks to arrange for lorries 
that carry out the primary 
distribution, of goods from 
supplier factories, also to 
carry out secondary distribu- 
tion. of products from distri- 
bution centres to stones. 

It is one of a number of 
initiatives by the logistics 
industry to minimise costs, 
reduce harmful emissions 
and combat road congestion 
by cutting out empty run- 
ning. improving the carrying 
efficiency of lorries and 
reducing mileage. 

After the supplier's vehicle 
has off-loaded at the retail- 
er’s distribution centre, 
before returning to its own 

depot, it is reloaded with 
goods for delivery to a store. 

Traditionally, the return 
trip from the distribution 
centre is run without a load 
and the unproductive back- 
haul mileage is charged to 
Tesco. Even though the 
vehicle does return empty 
from the store to its depot 
for repositioning, the scheme 
eliminates significant levels 
of unproductive mileage and 
results in major savings. 

The scheme follows 
directly on from another in 
which tbe vehicles Tesco 
uses to deliver to stores are 
also used to travel on to des- 
ignated suppliers to collect a 
primary load before return- 
ing to the distribution cen- 

As a result, the 3m a year 
cut in vehicle mileage is sav- 
ing the company 1.7m litres 
of fuel valued at £720.000. 

But the challenge of the 
latest scheme is that it 
requires suppliers and then- 
transport contractors to 
adapt their trailers to accom- 
modate the different packag- 
ing technologies required for 
primary and secondary dis- 

Smith says adapting trail- 
ers used for ambient prod- 
ucts costs about £1.500 and 
takes about seven hours. For 
vehicles the cost is about 

He appreciates the conflict 
for hauliers that do not work 
exclusively for Tesco suppli- 
ers and, likewise, for suppli- 
ers that supply other grocery 

He says: "I intend to make 
the same level of savings 
with the latest scheme 
within three years as I have 
with our existing scheme. 
Others in the industry, 
including competitors, could 
achieve the same efficien- 
cies. I call on them to get 
involved so that we can 
develop common equip- 

Another study, published 
recently by Professor Alan 
McKinnon and James Camp- 
bell from the Heriot-Watt 
University School of Man- 
agement, emphasises the 

cost savings and environ- 
mental benefits of increasing 
truck capacity by using dou- 
ble-deck or high cubetrailers. 

It shows that 32.5 tonne 
articulated trucks that use 
the systems could reduce by 
29 per cent a year the overall 
distance travelled in the UK 
by this class of -vehicle as 
well as cut total operating 
costs by £340m a year. 

It says that by using the 
systems, this class of vehicle 
can. on average, run at 70 
per cent of capacity, the 
same as for its 38-tonne 

But it warns that the envi- 
ronmental benefits of 
increasing the cubic capacity 
would be lost if the cost ben- 
efits resulted in freight being 
moved from rail to road and 
in companies making greater 
use of road transport. 

It says that the increasing 
fragility of products and 
weakening of packaging 
material is limiting the 
height to which loads can be 
stacked. Drinks cans have 
become t hinn er and rigid 
boxes have been replaced by 
cardboard trays which offer 
no vertical support. 

The insertion of an upper 
deck relaxes this constraint 
and permits greater load 

“Making better use of the 
cubic capacity of lorries cuts 
the cost of road haulage and 
reduces its impact on the 
environment.** the report 

But the report also says 
that unless the current sys- 
tem of basing haulage rates 
on the distance travelled is 
changed to relate to load 
sizes, contract hauliers will 
be deterred from using the 
high-volume trailers system, 
thereby limiting its full 

Meanwhile. Scottish road 
haulier McKelvie is demon- 
strating how a structured, 
low-cost, programme of lorry 
driver training can result in 
significant reductions in 
energy- consumption, pollu- 
tion and accidents. 

The training highlights 
the influence the driver has 
on fuel consumption and 

to—, ' s ^4 1 

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AIR FREI GHT • by Michael Demosm y- 

From satellites to 
silicon, on time 
and undamaged, 

. air freight is 

If one company embodies the 
heavy-weight image of air 
freight it js siar 
Russian, venture 
Volga Dnepr. 

The company 

fleet of transport 

including 20 Antonov 
Russia's answer _ 

US military freighter 

Galaxy. When the Thrust jet- 
powered car moved to 
Nevada for the British 
attempt at the world land 
speed record It travelled in 
an aircraft from Heavy] .if* 
An entire, intact German 
bottling plant was recently 
flown to Koala Lumpur in a 
Heavy Lift Antonov. 

freight hire for the latter 
ran to around $350,000 but 
this was negligible compared 
to the cost of dismantling 
and rebuilding the plant. 
The contract Is a perfect 
example of what HeavyLift 
commercial manager Vince 
Seeger believes are the main 
selling propositions of air 

"People call us in when 
they've tried everything else. 
And we can. save months of 
profitable operation by put 
ting a plant down in com- 
plete order," he says. 

This ability to shift large 
loads with care has 
prompted the space industry 
to rely on air freight to 
deliver satellites to their 
launch sites.. The modules, 
kept in a special clean roam 
at the manufacturer's site, 
can be flown to the launch 
platform at the last possible 
moment to minimise the risk 

all things great and small 

t’.-i-tjfr. ; .r.f ~ 

■ . • - ' 1 'Z' >:• > ; v ■■ . 

Anything goe« The Antonov 124 can accommodate entire manufacturing plants - Intact 

Jet-powered can Thrust was atr-fifted to the Nevada desert for its successful attempt to break the land speed record 


Of contamination or damage. 

Air freight’s ability to 
schedule and deliver on time 
also attracts clients. Rock-IT 
Cargo deals with the 
demands of touring rock 
bands. "Our businesses very 
time sensitive" i- says 
operations manager Alan 
Durrant. "If we’ve got 200 
employees on the road they 
need the equipment -in the 
right place or we’re paying 
them to do nothing/ The 
spectacular capacity of the 
Antonovs has allowed 
Rock-IT to move huge stage 
sets at very short notice. 
"You can drive trucks right 
into the plane,” Durrant 

The time pressures on air 
freight customers are evi- 
dent at the offices of Can tins 
gency Film & Entertain/- 
ment CFG operates as an 

independent loss adjuster for 
insurance underwriters con- 
cerned with the mass enter- 
tainment sector. Peter Dut- 
ton, CFE manag in g director, 
says that while a delayed air 
freight shipment can cripple 
a film shoot, riarmw against 
such hitches are "quite 

He points out that aviation 
authorities have learned a 
lot from past mishaps. 
"There was a recurring prob- 
lem in the US, where medi- 
cal radioactive isotopes were 
sometimes shipped next to 
canisters of film." After sev- 
eral cans of film became 
severely fogged due to radio- 
active contamination the 
Federal Aviation Authority 
regulated the goods isotopes 
could be shipped with. 

Asia is the prime market 
far the air freight industry 

as the geography of the 
region combined with the 
comparatively short sbelf- 
life of its main product, high- 
tech goods, demands air 
transportation. Paul Mar- 
tins, manager of the air 
cargo division of the $22.4bn 
transportation company 
UPS, says the electronics 
industry is a huge customer 
for air cargo services in the 
region. "In Asia 90 per cent 
of the electronic goods move 
via air." 

Asia sits at the top of the 
air freight league table with 
23bn tonnes shipped annu- 
ally. North America comes 
second with i.8bn tonnes fol- 
lowed by traffic between 
Europe and Asia, 1.4bn 

For global companies, 
such as IBM, air freight is a 
much more attractive propo- 

sition in the US than in 
Europe. Under the title of 
QuickShip, IBM is energeti- 
cally cutting the delivery 
times for its vast range of 
computer products. It Is aim- 
ing for three day delivery in 
the US with a four day deliv- 
ery schedule in the more 
fragmented European mar- 
ket. Julien Roitman, director 
of product management at 
IBM Europe, believes there 
is better air freight coverage 
in the US. "In the US air 
freight is an industry by 
itself. That’s not the case 
within Europe." 

Nevertheless, air freight is 
big business for some Euro- 
pean passenger airlines. 
While much of British Air- 
way’s £565m annual cargo 
carriages goes in the holds of 
passenger aircraft the com- 
pany is investing £250m in a 

new cargo centre at Lon- 
don’s Heathrow airport. 

BA prefers to work with 
partners in air freight. The 
company's World Cargo 
operation is a joint venture 
with Japan Airlines. Singa- 
pore Airlines and Korean 
Airlines, an alliance which 
reflects the Asian dominance 
of airfreight BA works with 
$I3bu freight forwarder AEI 
which ships goods world- 
wide for such technology 
businesses as Hewlett-Pack- 
ard and Motorola. 

And BA's new freight ser- 
vice from London to Tel 
Aviv uses a jet aircraft in 
the colours of Channel 
Express in what the aviation 
industry calls a *wet lease*, 
employing the crew of a 
third party to add capacity 
to a route. "If you own 
freighter aircraft it's very 

difficult to make money out 
of them," says BA spokes- 
man Jamie Roche. 

Rein Westra, transporta- 
tion director for KPMG 
Netherlands, says fierce 
competition has forced pas- 
senger airlines to increase 
the utilisation of each air- 
craft. This translates into 
faster turn-around times, 
which reduce the time avail- 
able for loading and unload- 
ing freight. "Most airlines 
see themselves as passenger 
carriers first and foremost 
Cargo is an add-on revenue," 
says Mr Westra. 

This opens up opportuni- 
ties for companies that offer 
a door to door delivery ser- 
vice. Mr Westra character- 
ises UPS and Federal 
Express as integrators, mov- 
ing items across the globe in 
one process. 

UPS operates a fleet of 197 
aircraft, with 302 more on 
charter, to move its share of 
the llm documents and 
packages it estimates are 
shipped within and from 
Europe every day.But it 
turns to third party’s such 
as the Swiss freight for- 
warder Danzas. to move 
heavy freight. UPS's aim is 
to concentrate on packages 
of less than 70 kilos leaving 
Danzas to deal with large 
palletised shipments. 

Hie UPS-Danzas deal illus- 
trates that the integrators 
cannot do everything by 
themselves. Air freight spe- 
cialists such as HeavyLift 
will continue to do business 
by offering a distinctive ser- 
vice that slips neatly into 
the transportation vacuum 
between the air line and the 

RAIL • by Charles Batchelor 

Freight coming 
back on the rails 

As Europe's roads 
dbg, rail js ^_ 
"returning as a 
viable transport . 

In the UK. British Steel 
announces plana to shift the 
transport of 500,000 tonnes of 
steel coll a year from road to 
rail in a move intended to 
allow it to make just-in-time 
shipments to customers in 
the West Midlands. 

In continental Europe 
OOCL, a Hong Kong-based 
shipping line, launches a 
twice-weekly rail service car- 
rying car parts from the port 
of Antwerp in Belgium to a 
Chrysler assembly plant in 
Graz, Austria. 

These developments Illus- 
trate the efforts which are 
being made to expand the 
use of rail In the transport 
c hain. Increasing motorway 
congestion and pressure 
from environmental lobby- 
ists are forcing companies to 
review alternatives to road 

Governments, too, are 
keen to encourage a shift to 
rail to reduce congestion and 
pollution- But it will not be 
easy to reverse the long-term 
declin e of rail, down to just 7 
per cent of total freight 
transport in the UK from 42 
per cent in the 1950s. In the 
European Union as a whole, 
rail’s share has fallen from 
32 per cent in 1970 to 16 per 

Despite a renewed wllliag- 
Tfwaa on the part c£ shippers 
and the logistics industry to 
consider rail - prompted by 
the decentralisation and pri- 
vatisation of Europe's rail- 
ways - there remain formi- 
dable obstacles to be 


Customers continue to 
complain about the unrelia- 
bility of long-distance ship- 
ments through Europe and 
about over-optimistic prom- 
ises of delivery times. 

“I am continually frus- 
trated by the hype about 
what the rail services can 
offer,” Alan Bush, UK three- 1 
tor of International Freight 
Brokers, wrote in a recent 
edition of International 

Freighting Weekly. 

“Tie norm is for a trailer 

to take about a week to]. Intended to deliver a more 
reach us from time of Joadi; reliable service and cut 

. ing. in northern Italy, com- .. costs. 

pared with a maximum of Another recent arrival on 
three days for a road trailer. _ the European rail freight 
The service being giv^i is~ scene is NDX Intermodal, an 
totally unacceptable toODur-r alliance of CSX Intermodal 
selves and our clients. ' £ of the US and the German 
Among the problems- are^ and Dutch railways, which 
customs inspections vgjtucbi? launched a service between 
can lead to a trailer bein^ Antwerp and Rotterdam last 
taken off a train for uptio 48c January. It has since added 
hours. £ £ routes between Rotterdam 

"Rail is all right forSbullc and Munich and Hamburg 
loads and for journeys of 25Ct and Milan. 
miles or more but it £ not In the UK, where rail pri-ij 
flexible enough for us,~say£ vatisation has been pushed;, 
Edward Roderick, chia£exe<£ further than in any otheri 
utive elect of Christian7SaIv£ country but where rail- 
esen a logistics group- *Tt freight has been constrained: 
cannot be used for multiply by the shortness of the jour-: 
'drops’ or for making3!lelii&' neys involved, trials are 
eries to customeis ip being carried out to see ifr 

sequence. z ^ 

The priority given & pas- 
senger services and th% 
absence of any significant 
plans to expand the rail net- 
work to accommodate goods 
suggest that rail freight may 
be even more constrained in 
future, Mr Roderick says. 
“The Channel famnel will be 
full fa five years.’* he notes. 

To meet these objections 
the European Commission tts 
w o r kin g (m plans to develop 
a network of “freight free- 
ways’* spanning the Conti- 

At present the average 
freight train travels'.' at just 
Trim* miles an hour on a typi- 
cal journey because of cross- 
border delays. But &e free- 
ways would provide open 
access to any ^carrier 
approved under a lic enc i n g 
system and would gfefc eggal 
priority to freight and pas- 
senger trains. The paper- 
work involved ini border 
crossings would also be sim- 
plified. These measures 

should raise average speeds 
to Just less than «0 mph, 
enabling rail to .comifete 
with road. 5 

Some freight operators are 
pushing ahead with sched- 
uled services in advance of 
these improvements. 

OOCL has traditionally 
moved Chrysler parts’ in 
Europe on mixed trains car- 
lying consignments ?for other 
companies. But earlier this 
year it launched a, dedicated 
service of its own£ forming 
“block trains” consisting 
solely of Chrysler dpntajieis 

the range of railbome shipf 
meats can be extended. 

MiTk Marque, the main UK 
milk distributor, has held 
trials moving milk tankers 
from Penrith in Cumbria to 
central London on special 
flat-bed rail wagons. Safe- 
way, the supermarkets 
group, has experimented 
with shipments of food and 
non-food items between the 
Midlands and Scotland. 

These trials are still being 
evaluated but British Steel 
was convinced enough of the 
benefits of rail to increase 
substantially the volume of 
rail shipments from its south 
Wales steel mills to the west 

The steel coils will travel 
overnight by rail and be 
available for distribution, by 
road, to local customers, 
from two railheads in the 
Midlands. The use of rail, 
combined with road for the 
final stretch, will allow Brit- 
ish Steel to meet the more 
H oman ding requirements of 
its customers. “They want 
more sophisticated delivery 
patterns,” the company says. 

John Harvey, chairman of 
Tibbett & Britten, a UK- 
based logistics group, says 
rail can work for long-haul 
UK domestic deliveries com- 
bined with road for pick-up 
and final delivery. “Rail is 
viable In the UK provided we 
get flexibility and consis- 
tency," he says."There were 
always problems when we 
used rail in the 1960s but I' 
am impressed with its per-; 
formance now." 

Rafrnadad: Moves 

« a** to redress foeun««n between^ end ^ 

Lorrome E.!*me 4) fowtartf jrom LiWpoot j$k» ?tooref Vvtfvtrftoj 


Business Class comes naturally to Lorraine and Elaine - their 
Merseyside flies high with academic talent like their own. 

Sony for software design, Abbey National for financial services, 
Owens Coming, QVC and Telewest for call centre communication, 
Sainsburys and Booker Belmont for distribution management - no 
shortage of new companies taking off in Merseyside. And no short- 
age of skills from our 50,000 undergraduates. 

Like Lorraine and Elaine, our workforce is young, bright and lively. 
Competitive and fon, they work hard and play hard - ideally placed 
in Merseyside. The future's looking good, girls. Business Class 
is only the beginning! 

There’s a great deal on Merseyside. 

To discover more about the investment 
potential on Merseyside telephone 

0800 22 0151 



A ’pool 
of talent 


T ' ’ 1 

V " 




TECHNOLOGY • by Claire Gooding 

Perfection is a seamless transition 

Industry leaders 
are combining IT 
systems to 
provide complete 
logistics packages 

Technology has solved all 
the problems of logistics as 
sparkling tools - such as bar- 
codes. computers in the cabs 
and satellite tracking 
systems - have fallen Into 
the hands of logistics manag- 
ers and made their lives easy 
- at least, that is the theory. 

But the ultimate logistics 
challenge remains - the ideal 
is to prevent slippage 
through the seams of a pro- 
cess that should be seamless. 

A piecemeal approach will 
use appropriate technology 
to target a particular prob- 
lem, such as efficient deliv- 
eries and the whereabouts of 
vehicles, but it will not be 
able to benefit the 'business 
process’ on its own. 

This lack of integration is 
a problem most companies 
softer says Dr Diana Hodg- 
ins. senior partner of Hert- 
fordshire University’s Busi- 
ness Technology 

Exploitation Unit, the hub of 
a Supply Chain Network 
Group whose work to raise 
awareness of the problem is 
funded by the DTI and the 
European Commission. 

"If you look at the internal 
information flow, that's 
where most companies lack 
an understanding of their 
own business. One company 
we're working with has 
spent in excess of £100.000 on 
hardware and software but 
is unable to integrate the IT: 
and it's losing them money. 
Too often, data is re-entered 
from one system to another." 

Martin Murphy, managing 
director of the Supply Chain 
Network Group at the Uni- 
versity of Glasgow, takes the 
argument further. "The ideal 
integrated chain extends 
from the customer's cus- 
tomer to the supplier's sup- 

The domain of logistics 
was once separate from 
other parts of the business, 
complete with its own crite- 
ria of efficiency. Now logisti- 
cal efficiency is expected to 
feed its benefits back into 
the entire business, perhaps 

Best bitten Bass's appScation of new technology saw it named as Logistics Company of the Year 

even at each joint of the sup- 
ply chain. That cannot hap- 
pen unless someone stitches 
all the various systems 
together - including, as Mur- 
phy suggests, the systems 
belonging to suppliers and 

A rare example of feeding 
accurate information back 
into the production loop, and 
using one IT system to feed 
another, comes from Bass 
Breweries, winner of the UK 
Institute of Logistics Com- 
pany of the Year award. It 
won its prize partly by pris- 
ing extra profitability from 
that humble carrier of amber 
liquid, the keg. 

"What we've done is inte- 
grate product scheduling 
with the problems of return- 
ing empty kegs and casks," 
explains Howard Stone, 
logistics supply manager at 
Bass Brewers in Burton-on- 
Trent. Bass has experience 
of picking "best of breed' IT 

solutions and getting them 
all to work together. To 
solve the problem of return- 
ing 2m kegs from depots to 
breweries, it brought 
together information gleaned 
from many different 
systems, some from rival IT 

"We like to think we have 
an integrated approach," 
says Mr Stone. 

The company uses JBA's 
software for financial trans- 
actions and for the inventory 
of finished goods arid empty 
containers. That creates a 
sales history to drive the 
Demand Pl anning module 
from Manugistics. one of the 
leading suppliers of logisti- 
cal software packages which, 
in turn, feeds into a set of 
software from Numetrix, 
another established; supplier 
of logistical software, com- 
prising its 3D, Linx. and 
Schedulex products. 

"Linx and 3D are used to 


l i&; 

k »viv ; 


■* ; •, 

\ . .. 

. ' ./’3V, 

V.' - 

If one thing is certain, it's that the years ahead spell 
ever-intensifying pressure. To be competitive in local 
and international markets. To respond mote quickly and 
accurately to customers’ needs. To raise productivity 
while reducing costs. To deliver the 
right products in the right ' ■ 

place at the right time .. ffrVi&i’* ri l:~V . = '■*/, 

and at the right price. ( V. V . i-'.V : — 1 

Just as 
Ryder will 
Taking the 

transportation forward. Develop- 
ing innovative solutions for the operation of 
vehicle fleets, the management of distribution, the optimis- 
ation of logistics on a national. pan-European or global 
scale. Working with our customers to ensure that our 
services integrate smoothly with their in-house processes 
and adapt to the changing needs of their business. 


In the future, we may see, exports carried through 
the outer atmosphere by H^TOL aircraft production 
materials trunked from '.-supplier to assembly 
plant by auto-guided; uw|l. and finished goods 
delivered gently to the consumer's 
T* _ dfcor by solar-powered van. 
r ’• - * j No-one knows precisely 
what lies ahead, or 
when. But you can 
V « . «■ rest assured that 

Ryder will bring you the 
benefits of new technologies. 
As we do today. 

If you're seeking an effective strategy for acquiring, 
operating and maintaining vehicles, for reducing 
warehousing and inventory costs or for any other 
aspect of transportation and logistics, don’t miss the tide. 
It's time to talk to Ryder. - 

- 1 ;; r x , N 

— -v - >- . : 

?v. ; Ka 5 fi-, : ;• 

-*-■ -• •’ 


- L — J A -y v^Z^tL. 

Ryder Pic. Ryder House. 16 Bnih Road. Slough SL1 3SA. Tel; 01753 735 402. Fax: 01753 735 499 



from Symbol Technologies of 
Long Island. NY, wffleh aifc- 
ri«ii«!As in such techniques 
as barcode laser s c an nin g 
(using the barcodes known 
as PD 417 whose *3D’ bubbles 
can carry a great deal more, 
information than ' mere 
stripes) and cab-borne com.-, 
puters whose contents can ■ 
be read by comput ers a s 
they pass through electronic 

Supply side: Logistics managers now have the technology to smooth the flow along the supply chain 

convert a sales forecast into 
a packaging requirement - 
how many kegs of what need 
to be prepared in the week," 
explains Mr Stone. "We have 
to apply lead times and 
model the network to see 
when to move the beer from 
the brewery". 

The packaging of the beer 
has to take into account 
existing stocks and the feet 
that brewing beer can take 
anything from 10 days to six 
weeks. Schedulex uses data 
from the other modules to 
determine which beer needs 
to be packaged on each line 
hour by hour and this infor- 
mation feeds process control 
and Prism, Bass's materials 
requirement planning pack- 

The missing link was the 
packaging for transporting 
the beer - kegs and other 
containers. "We decided to 
treat the demand for con- 
tainers In the same way as 

we would treat demand for a 
product. We predict the rate 
of return from customers 
using an in-house algorithm 
and from that we create 
product availability— it's 
effectively a supply chain in 
reverse." says Mr Stone. 

Bass works out which 
depot should send which 
container to which brewery 
using linear programming 
and an heuristic solver con- 
verts the optimal solution in 
to a practical one. allowing 
for batches, lorry sizes and 
availability. "Finally we look 
at vehicle availability from 
the Full Goods Movements 
module, using the same 
vehicle for bringing the emp- 
ties back if possible. That 
closes the loop and makes 
sure that we have the right 
number of containers when 
we need them." says Mr 

In the ideal world of Effi- 
cient Customer Response 
fECR), Bass is a good exam- 
ple of how the benefits and 
principles of just In time 
manufacturing apply right 
down the chain and, indeed, 
feed back into it The chain 
reaches from raw materials 

through the manufacturing 
process, warehousing, sales 
and marketing, retailing, 
including deliveries between 
all these stages, and right 
through to the end cus- 

Retailers such as Salis- 
bury (sponsor of the Insti- 
tute of Logistics prize and 
itself an innovator) have 
been quick to experiment. 
Futuristic visions of all 

shoppers whisking barcoded 
goods through hi-tech gates 
have actually become real- 
ity. These scan in the entire 
value of products in the has-, 
ket and automatically debit 
the customer's card. 

But experimentation is not 
limited to food retailers. 
Companies such as B&Q and 
Toys R Us are also pioneer- 
ing this technology, known 
as Spectrum 24. It comes 

"Such advances are t aking 
their Hma to be accepted" 
says Warren Bunce, systems 
manager for Barcode 
Systems. "Wireless LAN S,; 
for example, are be ginnin g 
to be used by companies like 
Safeway and I celand . for 
warehousing, partly because 
a new standard helps boast 
the technology. Customers 
can be sure of compatthfitty 
which has always been, a 
problem before." • 

Such systems feed accu- 
rate, reliable information 
into that ‘seamless floV. It 
is getting the whole picture 
that is important, according . 
to logistics expert Richard J 
Sherman, senior vice presi- 
dent of Numetrix, head- 
quartered in Toronto. 

"You don’t generate profit- 
ability from a re as onable 
schedule. But get to know 
the ri ght mi* of inventory ■ 
and production capacity’ 
and just the right mix of 
transportation • and you can 
generate profit. Determine 
whether to outsource, build . 
a new plant or add a distri- 
bution centre and there you 
find a lot of profit" 

The Oriana: Venue for Logistics 97 , at which the Industry's key issues wffl be cBscussad 


Smith Kline Beecham 

■■ 's . z ' 'y. ‘.j 

• S'" 1 " ‘ . *• *- - n*. V-tf • -V ‘/'Vv ■' f -itf?,' 

IT is sweetening the pill 

The wave of mergers that 
has swept through the phar- 
maceutical industry has cre- 
ated new opportunities for 
the big healthcare groups 
but also saddled them with 
logistics headaches as they 
attempt to build integrated 
supply chains from the 
patchwork of factories and 
fragmented distribution net- 
works they have inherited. 

S mith Klin e Beec ham (SB) 
is typical of the new breed of 
healthcare multinational. 
The Anglo-American group 
inherited two distinct logis- 
tics operations when the UK- 
based Beecham Group 
merged with its US counter- 
part SmithKline Beckman in 

For example, the two com- 
panies were using different 
warehouse management 
systems so, after the merger, 
the enlarged group invested 
in new warehouse manage- 
ment software for its UK 
pharmaceutical distribution 
centre, which supplies the 
UK’s principal distributors 
and retail chemist chains as 
well as international mar- 
kets. The centre had previ- 
ously used manual stock 
picking alongside a complfr 
cated computerised system 
creating problems of batch 
control and difficulty iq. 
reconciling records. The new. 
system is based on a com- 
mercial software package in 
which the warehouse staff 
receive the picking orders on 
hand-held radio data termi- 

According to SB, the new 
system has improved stock 
control and reduced errors 
in stock picking. But one of 
the biggest benefits is tbat it 
allows the company to.- 
quickly spot high de man d or 
unusual orders and react 

Snch "demand-led" 
systems are the key to: 
improving logistics as they 
allow companies to more 
quickly respond to changing - 
demand, improve customer 
service and reduce invento- 
ries- Now SB wants to go 
much further and standar- 
dise its supply chain pro- 
cesses around the world. 

Pharmaceutical products 
have traditionally resisted 
standardisation because of 
the wide cultural and regula- 
tory differences between 
national markets. So when 
SB was formed, it inherited 
many different ways of 

doing business in the 100 
countries where it markets 
its products and found itself 
the owner of more than 70 
plants scattered around the 

"It's a greater number 
than we would like," admits 
Andy Wright, director of 
planning and enterprise inte- 
gration for SB. "With the 
merger we inherited two 
very different ways of doing 
things and there was very 
little integration.” 

SB started an ambitious 
“enterprise integration" proj- 
ect in 1996. The aim is to 
radically overhaul its logis- 
tics and manufacturing facil- 
ities and transform itself 
into a global group capable 
of sharing processes and 
information across func- 
tional, geographic and busi- 
ness boundaries. 

This project entails chang- 
. mg the ways of working and 
replacing or upgrading the 
supply chain computer 
systems in more than 70 
plants. Previously, these 
plants focussed on products 
for specific markets but SB 
: now wants to “decouple" the 
plants from national mar- 
. kets and standardise its sup- 
ply chain internationally. 
"Today there is little coordi- 
nation between the plants, 
which are managed on one 
side of the business, and the 
markets, which are managed 
on another," says Mr 
W right 

SB is building a new sup- 
ply chain system based on 
standard application soft- 
ware packages and a global 
electronic data interchange 
(EDI) network that allows 
the group to match supply to 
demand. A demand manage- 
ment system is instanod in 
each market to handle sales 
order processing, accounting 
and inventory functions. A 
more specialised software 
package takes care of 
demand forecasting and col- 
lects historic sales data. In 
the plants, a supply manage- 
ment system handles order 
management and manufac- 
ture planning and site inven- 
tory. The supply and 
demand management 
systems, which may be 
located on opposite sides of 
the globe, keep in constant 
touch using SB's global data 
network and exchange stan- 
dardised EDI messages that 
represent shipping notices, 
net requirements, supply 

plans and invoices. 

. The project is several 
years from completion and 
SB has had to move cau- 
tiously. For example, for the 
supply and demand manage- 
ment systems it has standar- 
dised two separate soft- 
ware products it was already 
using Instead of choosing a 
singler integrated package. 
“Starting from scratch with 
a new Integrated product 

would have put an unaccept- 
able risk an the business,” x 
says Mr Wright. • 
Nevertheless, SB hopes the . 
investment in new logistics".: 
systems will turn its current. ’ 
hotchpotch of plants and 
markets into a single supply - 
chain to better support the 
group and its customers • 

Geoff Nairn 


Retail A Consumer Publishing . 

Your Key to Success in 
■ Global Logistics 

> Extensively researched and supported throughout with 
: exclusive case studies, tables and figures, these ground- 
breaking FT Retail & Consumer Reports provide you 
i with the most up-to-date information, incisive analysis 
- in-depth coverage of the global logistics scene. : 1 

s Trends in European Consumer Goods 
September 1997 - £395/US$613. 


August 1997 - £450/US$69S 

Supply Chain Management 

July 1996 - £32Q/US$480 

Data Warehousing 
September 1997 - £375/US$563 

Supply Chain Technologies 

October 1997 - £375/US$563 


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